European stocks bounce back as Barclays and Novartis rise

* Euro STOXX 50 up 1.2 pct, fell 4 pct in last two sessions

* Greek PM addresses European Parliament as pressure mounts

* Barclays (LSE: BARC.L - news) climbs after ousting CEO

* Novartis (Xetra: 904278 - news) rises after U.S. regulatory boost

* Europe bourses in 2015: http://link.reuters.com/pap87v

* Asset performance in 2015: http://link.reuters.com/gap87v

By Sudip Kar-Gupta

LONDON, July 8 (Reuters) - European stocks rebounded on Wednesday after sliding at the start of the week as politicians gave Greece more time to come up with a deal to avoid having to leave the euro.

British bank Barclays and pharmaceuticals group Novartis were among the best performers, rising 3.3 and 1.7 percent respectively. Investors welcomed Barclays' decision to dump its chief executive and Novartis got a boost from regulators.

However, European car stocks retreated after weak Chinese sales data.

The euro zone's Euro STOXX 50 index, which fell 4 percent in the last two sessions, rose 1.2 percent. Germany's DAX was up 0.8 percent, Spain's IBEX gained 0.9 percent and Italy's FTSE MIB rose 2.1 percent.

European shares dropped at the start of the week after Greek voters rejected austerity measures imposed on the country as part of a bailout programme. A stock market sell-off in China has put further pressure on markets.

Some investors remain confident Greece will reach a deal to stay in the euro zone. Others said cash and liquidity from the European Central Bank (ECB) would limit any hits to broader European markets if Greece did leave the euro.

Greek Prime Minister Alexis Tsipras pleaded on Wednesday for a fair deal to keep his country in the euro zone, acknowledging Greece's own responsibility for its plight, after EU leaders gave him five days to come up with reforms.

"At the end of the day, the ECB have an arsenal of products to contain the problem," said Kevin Lilley, European equities fund manager at Old Mutual Global Investors (OMGI).

GREXIT RISK RISING

The Euro STOXX 50 index remains up 6 percent so far in 2015 and the DAX is up 10 percent, although both are below their earlier peaks for the year, with the DAX some 13 percent below a record high reached in April.

Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said that while investors were "probably priced" for Greece leaving the euro - dubbed a 'Grexit' - they also expected contagion from any such event to be limited.

OMGI's Lilley said he would keep an "overweight" position in European banks such as Societe Generale (Paris: FR0000130809 - news) , Spain's Banco Popular (NasdaqGS: BPOP - news) and UBS (NYSEArca: FBGX - news) , and stay "overweight" on Spain and Italy even though they could be hit by any deteriorations concerning Greece.

"The Spanish economy is recovering strongly and I like the reforms that Prime Minister Renzi is pushing through in Italy," said Lilley.

Today's European research round-up (Additional reporting by Atul Prakash, editing by Larry King)