European shares rebound as financials rise, Greek deal helps

* STOXX up 0.6 percent as financials recover

* Tesco (Frankfurt: 852647 - news) turns lower after well-received update

* Nestle (Swiss: NESN.VX - news) rises on possible US unit sale

* Greek stocks outperform led by banks (Adds details, updates prices)

By Danilo Masoni

MILAN, June 16 (Reuters) - European shares bounced back from two days of losses on Friday, as financial stocks recovered with sentiment helped by a Greek debt deal that further eased political worries in the euro zone.

The pan-European STOXX 600 index rose 0.6 percent on a rather quiet day for big corporate news, while the FTSE gained 0.4 percent and Germany's DAX added 0.4 percent.

"Overall there isn't a massive amount of major news or data out today," City of London Markets trader Markus Huber said.

"The exception is that Greece and their creditors have reached an agreement concerning the next tranche of bailout money which should be supportive for stocks as it removes some uncertainty going forward," he added.

Euro zone governments threw Greece another eleventh-hour credit lifeline worth 8.5 billion euros ($9.50 billion) late on Thursday and sketched new detail on possible debt relief as the IMF finally offered to help out after two years of hesitation.

Athens stocks rose 1.7 percent to a two-year high with banks providing the biggest boost. Some analysts expect any debt relief deal to unlock more value from Greek stocks.

Financials were also the biggest contributors to gains in Europe, adding 0.6 points to the STOXX index.

European banks rose 0.5 percent after touching their lowest level in nearly two months in the previous session on the back of weak U.S. data that raised doubts over the speed of rate hikes in the world's largest economy.

On a quiet day for company news, Tesco and Nestle provided investors with something to focus on.

Shares (Berlin: DI6.BE - news) in Tesco rose as much as 4.5 percent in early deals after Britain's biggest retailer released a first quarter update that showed UK like-for-like sales growth of 2.3 percent that beat analyst expectations.

However the stock later pared gains to trade down 0.3 percent as its weak international same store sales overshadowed the strong UK performance.

The retail sector in Europe suffered sharp falls in the previous session when H&M sales disappointed and UK data showed consumers were feeling the impact of rising inflation. The retail index was up 0.4 percent.

Nestle rose 1.8 percent after saying it might sell its $900 million-a-year U.S. confectionery business in a move that Morgan Stanley (Shenzhen: 002588.SZ - news) said was a "clear positive" following disappointment earlier this year when the group ditched its sales target.

Auto stocks were also positive after data showed that European car sales rose 7.7 percent in May, nearing their pre-crisis levels and returning to growth after a dip in April.

While Friday's gains were spread across the market, European shares were on track to end lower for the second straight week, as worries over slowing economic growth and rich valuations have halted a rally that brought the STOXX near two-year highs in May. ($1 = 0.8947 euros) (Reporting by Danilo Masoni; Editing by Toby Davis)