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Kingfisher jumps after raising bottom-end of profit

forecast

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Barry Callebaut rises after Barclays sweetens ratings

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STOXX 600 up 0.5%

(Updated at 0810 GMT)

By Shubham Batra

Sept 17 (Reuters) - European stocks hit a two-week high

on Tuesday, supported by financials, as markets drew closer to

an expected start to the U.S. Federal Reserve's monetary easing

cycle that could see policymakers deliver an outsized interest

rate reduction.

The continent-wide STOXX 600 index was up 0.5% at

517.74 points, and Britain's FTSE 100 outperformed its

European peers with a 0.7% jump.

All sectors were trading higher, led by a nearly 1% gain in

basic resources, as greenback-priced copper edged higher

due to a softer dollar and expectations of a U.S. rate cut.

Banks and travel shares also boosted the

markets, rising 0.8% each.

Investors will be squarely focused on Fed's decision on

Wednesday, with markets now pricing in a 67% chance that the

U.S. central bank could ease rates by 50 basis points.

"I think there is some volatility and nervousness in the

market about the growth environment, maybe about politics. But

overall indeed about the central banks decisions," said Yvan

Mamalet, senior economic strategist at SG Kleinwort Hambros.

"I don't think it's only the Fed. I think the Bank of Japan

decision at the end of the week - the communication is also

leading to the uncertainty and maybe to the nervousness as

well."

Markets will closely monitor German sentiment survey at 0900

GMT that is expected to show a slight deterioration in

September, and U.S. retail sales, due at 1230 GMT, are forecast

to have contracted in August on a monthly basis.

European Central Bank's supervisor Claudia Buch and board

members Elizabeth McCaul and Frank Elderson will be speaking

later in the day.

Among stocks, Kingfisher was the top gainer, rising

7.1% after the European home improvement retailer raised the

bottom-end of its profit outlook for the full year.

Shares of Barry Callebaut climbed 7% after Barclays

raised the stock's rating to "overweight" from "underweight".

Sweden's Thule Group slipped 6.7% to the bottom

of STOXX 600 as its second-quarter revenue fell and its debt

rose.

Playtech ( PYTCF ) slid 2.3% after the British gambling

technology firm agreed to sell its Italian unit Snaitech for 2.3

billion euros ($2.56 billion), including debt, to the world's

largest betting company Flutter Entertainment.

Shares of Flutter were up 0.8%.