* STOXX hits record high for first time since February 27

* Most sectors rise, travel and leisure hits record high

* Renault partners with Thales to develop military vehicle

* Schneider, Foxconn partner on AI data centre

infrastructure

By Johann M Cherian, Utkarsh Hathi and Purvi Agarwal

June 15 (Reuters) - Europe's STOXX 600 hit a record high on

Monday, boosted by a relief rally across most sectors after the

United States and Iran reached a preliminary agreement that

would open the Strait of Hormuz and end the three-month-long war

in the Middle East.

Brent crude prices fell to three-month lows, while the

pan-European index closed 0.2% higher, recouping its

losses since war began on February 28, after U.S. President

Donald Trump, Vice President JD Vance and Iranian parliament

speaker Mohammad ​Bagher Qalibaf signed the memorandum of

understanding.

The index surpassed its February 27 peak, while the Euro

STOXX volatility index hit its lowest since late

January.

European shares had broadly underperformed their peers in

the U.S. and Asia since March, largely due to the continent's

reliance on the Strait of Hormuz for crucial oil supplies and

its smaller exposure to AI technology stocks.

With Monday's gains, the STOXX 600 is now up 7.2% for the

year, narrowing its gap with the U.S. benchmark S&P 500

that has risen more than 10%.

"It's probably the time you should see some rotation ... you

might be taking gains in some of the AI names that have rallied

very hard over the last month or two and could be recycling that

into areas like defense in Europe, which have been weak," said

Michael Field, chief equity strategist at Morningstar.

BROAD RALLY IN EUROPE

Spain's financials-heavy index led gains among major

regional indexes, climbing 1.4% to record highs. Germany's DAX

index rose 1.1% to a near two-week high. France's CAC

40 index gained 0.4% to pre-war levels.

Banks were among the biggest boosts to the STOXX

600, adding 1.5% to hit their highest since January 2008. Energy

price-sensitive auto stocks gained 2.6%, while airlines

such as Lufthansa and Air France jumped 4.5%

and 3.4%, respectively.

Still, analysts expect energy costs to remain elevated until

flows gradually return to pre-war levels. Concerns over

energy-driven inflation led the European Central Bank to hike

interest rates by 25 basis points last week.

The yield on eurozone short-term bonds,

reflecting interest rate expectations, fell to a two-week low,

although traders held onto expectations of another 25-bp ECB

rate hike before the end of the year, according to LSEG-compiled

data.

"You can feel the palpable relief in Europe. The ECB will be

pleased that they don't have to keep talking up a strong game

and probably that will outweigh their slight feelings of

embarrassment about having to have been bounced into a hike last

week," said Chris Beauchamp, chief market analyst at IG Group.

In corporate news, Renault Group gained 3.7% after the

carmaker said it would develop a military vehicle in partnership

with defence technology company Thales.

AI equipment maker Schneider Electric climbed 1.8%

after entering a strategic collaboration with Taiwan's Foxconn

to develop and scale infrastructure for AI data

centres.

Among laggards, energy stocks fell 3.1%, tracking

lower crude oil prices. They also weighed on London's FTSE 100

, which closed 0.4% lower. ​