By Sukriti Gupta, Sanchayaita Roy and Shashwat Chauhan

(Reuters) -European shares closed higher on Thursday as investors took in stride a stronger-than-expected U.S. jobs report, with bank stocks leading gains as focus remained on a potential trade deal between the European Union and the United States.

The pan-European STOXX 600 index closed 0.5% higher, in tandem with a 0.9% rise in the U.S. S&P 500. Germany's DAX advanced 0.6%, while France's CAC 40 added 0.2%.

U.S. job growth was unexpectedly solid in June, with the nonfarm payrolls reading shooting above market estimates for the month.

"Today's good news should be treated as such by the markets, with equities rising despite the accompanying pickup in interest rates," said Jeff Schulze, head of economic and market strategy at ClearBridge Investments.

U.S. interest rate futures show traders betting on a September start to Federal Reserve rate cuts and a total of just two quarter-point reductions by yearend, not the three rate cuts that they had favoured prior to the data.

Banks were the biggest boost to the STOXX 600, with British lenders Natwest and Lloyds leading the charge at a more than 3% rise each.

British stocks, bonds and the pound stabilised after losses on Wednesday as Prime Minister Keir Starmer's office rushed to give finance minister Rachel Reeves his full backing after she appeared in tears in parliament.

UK midcaps climbed 1.2%, while the internationally-focussed blue-chip index added 0.6%.

Also giving a leg up to global markets was the announcement of a deal between the United States and Vietnam ahead of next week's deadline set by President Donald Trump for new U.S. trade tariffs worldwide.

European Commission President Ursula von der Leyen said the European Union was aiming first for a trade agreement in principle with the United States before the deadline.

The U.S. also lifted export restrictions on Chinese-bound shipments from chip design software developers and ethane producers. German engineering company Siemens AG closed 0.8% higher after jumping as much as 3% in response to easing U.S.-China trade tensions.

Republicans in the U.S. House of Representatives advanced Trump's massive tax-cut and spending bill toward a final yes-or-no vote on Thursday.

Shares of some European renewable energy companies extended gains from the previous session, with Vestas up close to 7%. The final version of the U.S. bill is seen as more positive for wind power than an earlier version.

Accounts of the European Central Bank's last policy meeting showed ECB policymakers had cut rates to prevent an unwarranted tightening of monetary conditions in the face of elevated uncertainty around global trade.

Shares of French voucher and benefits company Pluxee climbed 4.4% after reporting an 11.1% organic rise in its third-quarter operating revenue.

(Reporting by Sukriti Gupta, Sanchayaita Roy and Shashwat Chauhan in Bengaluru; Editing by Nivedita Bhattacharjee, Sherry Jacob-Phillips, Peter Graff)