European stocks rebound as major banks and pharma shares rise

* Euro STOXX 50 up 1 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, lifted by a rise in heavyweight financial and pharmaceutical shares, while politicians gave Greece more time for a deal to avoid having to leave the euro.

The European rally contrasted with falls on Chinese and U.S. stock markets, with the New York market further impacted by problems at the NYSE.

Banks and pharmaceuticals added the most points to European stock markets. Barclays rose 2 percent as investors welcomed the bank's decision to dump its chief executive, while pharma group Novartis gained 2.1 percent after a regulatory boost for a product.

Telecom Italia also rose 4.5 percent after media group Vivendi did not rule out raising its stake in Telecom Italia, but European car stocks lost around 7 billion euros in combined stock market value after weak Chinese sales data. (http://bit.ly/1NSwOmm)

The euro zone's Euro STOXX 50 index, which fell 4 percent in the last two sessions, rose 1 percent. Germany's DAX advanced 0.7 percent, Spain's IBEX gained 0.8 percent and Italy's FTSE MIB rose 2.6 percent.

European shares dropped at the start of the week after Greek voters rejected austerity measures imposed 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 remains up 6 percent so far in 2015 and the DAX is up 10 percent, although both are below 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 including Societe Generale (Paris: FR0000130809 - news) and UBS , 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)