By Sruthi Shankar and Shreyashi Sanyal

(Reuters) – Shares of banks and automakers lifted European shares on Monday as investors continued to move into economy-linked sectors on hopes of a solid economic rebound from the coronavirus downturn.

The pan-European STOXX 600 index gained 2.22%, its best one-day performance since early November. The banking sector gained 3.73% to hit a fresh one-year high.

Spain’s Banco de Sabadell jumped 7.1%, while HSBC, Banco Santander and ING Groep rose more than 2%.

Automakers and insurers also rose about 3%, while sectors considered bond-proxies like utilities and personal & household goods were among the laggards.

“The reflationary trade is being more supportive of European stocks in general because they’re not as weighted towards growth and tech that the U.S. is,” said Neil Wilson, chief market analyst at Markets.com.

“You’ve got some progress on trade with between Europe and the U.S. and that’s good for some of the companies like Rolls-Royce.”

Aero engines-maker Rolls-Royce rose 7.3% to top gains on UK’s blue-chip FTSE 100. The European Union and the United States agreed on Friday to suspend tariffs imposed on billions of dollars of imports in a 16-year-old dispute over aircraft subsidies.

Meanwhile, England’s schools reopened to all pupils on Monday, marking the first step back towards normality as COVID-19 infection rates fall.

Data also came in positive, with the Ifo economic institute saying the mood in the German manufacturing sector improved for the third month in a row in February.

On the radar, a European Central Bank meeting later this week will show if policymakers have decided to step up the pace of emergency bond purchases to calm skittish financial markets.

“What they won’t welcome is the rise in borrowing costs that has come about as a result of the recent surge higher in global bond yields,” said Michael Hewson, chief market analyst at CMC Markets.

Pearson’s jumped 6.4% as its new boss set out his plan for the British education group to grow beyond schools and colleges with a strategy to build a lifelong direct connection to consumers by helping workers to learn new skills and retrain.

German meal kit delivery company HelloFresh sank 5.0% after BNP Paribas downgraded the stock to “underperform”.

London Stock Exchange fell 6.7%, extending its slide from Friday when it forecast higher costs for integrating data and analytics company Refinitiv, which it acquired in January for $27 billion.

(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Subhranshu Sahu, Saumyadeb Chakrabarty and Jonathan Oatis)