By Sruthi Shankar and Ambar Warrick
(Reuters) -European stocks ended higher on Monday after the European Commission outlined plans to loosen COVID-19 restrictions on tourism, while strong factory and retails sales data and a robust corporate earnings season added to the optimism.
The euro zone stocks index, which consists of markets in continental Europe, ended 0.6% higher, while the pan-European STOXX 600 index added 0.6%.
European travel and leisure stocks rose 0.2% after the European Commission recommended letting foreign travellers from more countries enter the bloc, hoping to boost the stricken tourism industry this summer.
But gains in the travel sector were limited due to a holiday in UK markets, given that British stocks make up the bulk of the sector. The UK holiday also kept trading volumes thin across European markets.
Still, bourses in Italy, Germany and Spain marked strong gains after a survey showed euro zone factory activity growth reached a record high last month, while German retail sales posted their biggest year-on-year increase in March since the start of the COVID-19 pandemic.
"COVID-19 infections are stabilizing in Germany and the Netherlands, are on a downtrend in France and Italy, and appear to be under control in Spain," analysts at BCA Research wrote in a note.
"Meanwhile, vaccinations are gathering pace across the euro area. This will allow authorities to ease restrictions and economic activity to accelerate."
Europe's benchmark STOXX 600 had ended April with a 1.8% rise, and just below its all-time high as a pick-up in European vaccination drive and solid earnings reports boosted hopes of a strong economic recovery.
Nearly half of the STOXX 600 companies have reported so far, and 75% have topped profit estimates, as per Refinitiv IBES data. Normally, 51% beat earnings expectations.
German health technology company Siemens Healthineers rose 2% after it raised its full-year sales and profit forecast.
German airlines Lufthansa rose 2.6% following plans to offer flights to more than 100 holiday destination, Chief Executive Carsten Spohr told a German newspaper.
Wind turbine maker Siemens Gamesa fell 3.9% after it warned it could earn less this year than previously expected.
Dutch telecommunications company KPN NV fell 2.6% after it rejected unsolicited takeover offers from a private equity consortium comprising EQT AB and Stonepeak Infrastructure Partners and another from KKR.
(Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D'Silva)