*

Defence shares and lenders lead gains in Europe

*

Germany's DAX rises after avoiding bear market in prior

session

*

J.P. Morgan sees euro area avoiding recession

*

ASML, AstraZeneca ( AZN ) among top boosts to STOXX 600

(Updates through European market close)

By Sukriti Gupta, Medha Singh and Lisa Pauline Mattackal

April 8 (Reuters) - European shares rose from 14-month

lows on Tuesday, after four straight sessions of heavy selling,

although investors continued to closely watch developments as

countries responded to sweeping U.S. tariffs.

The pan-European STOXX 600 was up 2.7% after

slumping over 12% in the past four sessions. World stocks

broadly recovered some ground lost in the past few days even as

investors worried about a possible global recession triggered by

an escalating trade war.

The European Commission proposed counter-tariffs of 25% on a

range of U.S. goods on Monday as the 27-member bloc grapples

with tariffs on autos and metals already in place and faces a

20% tariff on other products from Wednesday.

However, it watered down some initial proposals, removing

for example U.S. bourbon from its list. It has also offered a

"zero-for-zero" tariff deal to Washington.

"We've moved from uncertainty to a little bit more

certainty, and the market is trying to price that in," said

Stephen Dover, chief market strategist at Franklin Templeton,

though he added that volatility is likely to remain high.

Germany's benchmark rose 2.5% after the index

stopped short of confirming a bear market in the previous

session.

J.P. Morgan said it now expects back-to-back interest

rate cuts from the European Central Bank at its next four

meetings. While forecasting a 1.5% hit to GDP growth by the end

of 2026 due to the trade war, the brokerage sees the euro area

avoiding a recession.

European equities continued to look attractive, Dover

said, with less expensive valuations relative to U.S. stocks and

the prospect of German fiscal stimulus likely to boost growth.

European

pharma companies

warned the European Commission president that U.S. tariffs

would expedite the industry's shift away from Europe and toward

the United States.

On the day, all major European sectors gained ground.

Investors piled into defence shares, lifting

an index of those stocks 5.1%. The sector is among the best

European performers this year.

Meanwhile, shares of lenders, which had been knocked

down by slowing growth worries, rose 2.3% and stocks of insurers

gained 4.1%.

Dutch chip equipment maker ASML and the UK's

AstraZeneca ( AZN ) were the biggest boosts to the STOXX 600, up

4.3% and 3.2%, respectively, and were among the biggest supports

for the STOXX.

In company news, German chipmaker Infineon Technologies

edged up 0.8% after saying it would buy Marvell

Technology's ( MRVL ) automotive ethernet business for about

$2.5 billion in cash, to expand its microcontroller segment.

Germany's Continental rose 4.6% after saying it

plans to turn its ContiTech rubber and plastics division into an

independent entity.