European shares close near nine-week high, powered by utility, telecom stocks

By Sruthi Shankar, Ragini Mathur and Purvi Agarwal

May 20 (Reuters) - European stocks closed at near nine-week highs on Tuesday with utilities and telecom firms leading gains, while some positive corporate earnings also bolstered sentiment.

The pan-European STOXX 600 index .STOXX ended 0.7% higher after notching an eight-week high. Most regional bourses also ended up, with ones in Germany .GDAXI and Ireland touching a record high, while Spain's .IBEX was trading at its highest since 2008.

Utilities .SX6P rose 1.8%, leading broader gains, with Portugal's EDP ​​Renovaveis EDPR.LS climbing 4.1% after Deutsche Bank upgraded the stock to "buy" from "hold."

Shares of offshore wind power developers Oersted ORSTED.CO jumped 14.5% and Vestas Wind VWS.CO gained 4.8% after U.S. President Donald Trump's administration lifted a month-old stop-work order on a major offshore wind facility planned off the coast of New York.

Vodafone's VOD.L 7.3% gain after the telecom giant said it sees cash-flow growth this year boosted the sector .SXKP 1.7%.

Broader markets also stabilised after a surprise downgrade by Moody's on U.S. sovereign credit late on Friday sapped risk appetite. However, Wall Street had recouped early declines to close flat on Monday.

"The downgrade did shake confidence a little bit yesterday, but it seems like we quickly got over that... So (today) it kind of seems just a little bit of a rebalancing in appetite," said Daniela Hathorn, senior market analyst at Capital.com.

Meanwhile, China cut benchmark lending rates for the first time since October on Tuesday, to help buffer the economy against the impact of the Sino-U.S. trade war.

Luxury stocks, which are exposed to Chinese consumers, gained on Tuesday with LVMH LVMH.PA up 1.3%, Burberry BRBY.L gaining 3.7% and Kering PRTP.PA up 4%. The wider index .STXLUXP was up 0.3%.

The European Union and Britain announced new sanctions against Russia without waiting for the United States to join them, casting a cloud over future developments in peace talks between Russia and Ukraine .

Investors are also awaiting any trade deals, with Trump's reciprocal tariffs set to kick in again in early July.

On the earnings front, SalMar SALM.OL dropped 7.8% to the bottom of the STOXX 600 after the Norwegian salmon farmer reported lower-than-expected first-quarter operating profit.

London-based fast food chain Greggs GRG.L gained 9.2% after quarterly results while distributor Diploma DPLM.L hit a record high after raising its full-year organic revenue growth forecast.

Swiss bank UBS UBSG.S dropped 3.3%, with traders citing a media report that the lender was set to lose the first leg of a battle over government proposals to make it hold more capital.

Heineken HEIN.AS dipped 3% after Bloomberg News reported Mexico's Femsa FEMSAUBD.MX had sold its remaining stake in the brewer.