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Eurofins Scientific drops on Muddy Waters short position

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Germany's Hochtief heads STOXX on Jefferies upgrade

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STOXX 600 up 0.7%

(Updated at 1600 GMT)

By Shashwat Chauhan, Jesus Calero and Shristi Achar A

June 24 (Reuters) - European equities advanced on

Monday, led by gains in automobile and financial stocks, while

investor attention focused on the first round of French

parliamentary elections later this week.

The Europe-wide STOXX 600 closed up 0.7%, slightly

below a nearly two-week high hit earlier in the session.

Banks rose 1.7% to lead sectoral gains, with Italian

lenders such as BPER, UniCredit and Monte

dei Paschi di Siena gaining between 3.8% and 4.9%.

Automobile shares added 1.5% as the European Union

and China agreed to hold talks on the planned imposition of

tariffs on Chinese-made electric vehicles (EVs).

Ahead of the first round of France's parliamentary elections

this week, polls show a lead for the far-right National Rally

(RN) party and its allies. Previously analysts have feared a

far-right government could spend recklessly, but analysts on

Monday said the view had shifted.

The French benchmark closed 1% higher on Monday.

"The weekend has brought new signals that the National Rally

may not be as fiscally irresponsible as we and others have

feared," noted global strategists at Macquarie.

The party's likely candidate for France's finance ministry,

Jean-Philippe Tanguy said an RN-led government would end the

decades-long practice of running high budget deficits and stick

to the European Union's fiscal rules.

On the data front, German business morale unexpectedly fell

in June following a survey that showed pessimistic expectations

for Europe's largest economy.

"The optimism at the start of the year has given way to

realism. The (latest) readings have illustrated that the German

economy is still struggling to gain more momentum," Carsten

Brzeski, global head of macro at ING, said.

The data follows last week's weak readings on German and

broader euro zone business activity.

European shares recouped some losses last week, following

the French election shock-induced drop earlier this month.

However gained were checked as a rally in technology stocks

faded.

Among other stocks, Hochtief climbed by nearly 10%

as Jefferies upgraded the German construction firm to "buy" from

"hold", citing the company's growing exposure to high-tech

infrastructure projects.

Belgian pharmaceutical company argenx jumped 9%

after it said the U.S. FDA approved Vyvgart Hytrulo, a treatment

for chronic inflammatory demyelinating polyneuropathy.

UK's Prudential added 7.3% after the insurance group

launched a $2 billion share buyback programme.

Eurofins Scientific, however, plunged 16.1% to the

bottom of the benchmark index after short seller Muddy Waters

said it has a short position on the French testing company.