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UPDATE 1-European shares rally on U.S-China trade reprieve, STOXX 50 hits over one-year high

Amy Caren Daniel

over one-year high@

* All major European sectors in the black; Tech leads gains

* Trump says China trade talks 'back on track'

* Spain, Germany PMI factory June data disappoints (Adds comments, updates prices)

July 1 (Reuters) - European shares rose broadly on Monday with the STOXX 50 index hitting its highest level in 17 months, as investors piled into riskier assets after the United States and China agreed to restart trade negotiations after a long lull.

President Donald Trump offered concessions to his Chinese counterpart Xi Jinping including no new tariffs and reducing restrictions on tech company Huawei in order to lessen hostilities with Beijing.

The news helped shares in Asia gain overnight as investors piled into riskier assets, which took the shine off safe haven assets including gold and the yen.

The pan-European STOXX 600 index rose 0.9% by 0801 GMT, with the STOXX 50 - an index of Europe's biggest stocks , rising 0.7% to hit its highest level since February 2018.

Frankfurt's DAX rallied 1.5%, the most among the major European indexes trading higher.

"We were positioned for such a move ... it was unlikely there would be a (complete) breakdown, on balance the world economy can move ahead and we've noted that investors have been cautious and a modicum of good news would prompt them to come back to the market," said Andrew Milligan, head of global strategy at Aberdeen Standard Investments.

"In the big picture, it doesn't change anything. It's a stepping stone along the way. It (G20 meeting) was never likely to solve the whole problem, but it's a useful stepping stone."

The breakthrough in trade talks helped the main index start the second half of the year on a strong note, after posting its best first half yearly gains since 1998 on Friday.

The STOXX 600 index climbed 4.2% in June, which followed a sell-off in May that marked its worst monthly performance in over two years, on hopes that major central banks would be more accommodative to counter the negative effects of a trade war that has lasted for months.

The lighter restrictions on Huawei, as well as a report that U.S. semiconductor equipment supplier Applied Materials, will buy Japan's Kokusai Electric for about $2.3 billion, boosted European chipmakers.

Infineon, Siltronic, ams AG, STMicroelectronics and ASM International rose between 4% and 6%, and pushed the technology sector to a one-year high.

Auto shares followed closely behind, with a 1.62% bump, as the tariff reprieve triggered relief for companies most at risk from slower global trade.

Markets seemed to brush off data that showed the manufacturing sector in Spain and export-dependent Germany contracted in June. The downbeat data followed disappointing reports out of Asia as the U.S.-China trade spat put a strain on the entire manufacturing sector.

The blue-chip Swiss Market Index also gained 1%, in line with a rally in broader markets, despite the country's stocks being blocked from trading on EU exchanges after talks to resolve a dispute between Brussels and Switzerland collapsed.

Atlantia fell 2.9% and was among the few decliners on the STOXX 600, after a source said over the weekend that Italy's ruling 5-Star party believes the government has a legal opinion that would justify terminating a national motorway concession that accounts for a third of core profits at the company. (Reporting by Amy Caren Daniel in Bengaluru and Josephine Mason in London; Editing by Bernard Orr)