[BENGALURU] European shares closed higher as China-exposed miners jumped on fresh stimulus for the world's second-largest economy, but concerns about a resurgence of coronavirus cases in the region kept gains in check.

Travel and leisure stocks fell 1.5 per cent, continuing to slide after Britain added France and other countries to its quarantine list last week.

Adding to the sector's woes, Italy reimposed restrictions like shutting discos and clubs over the weekend and Germany declared nearly all of Spain, including the tourist island of Mallorca, a coronavirus risk region.

British Airways-owner IAG fell 5.3 per cent and InterContinental Hotels, which runs the Crowne Plaza brand, slipped 2.4 per cent as Britain saw a fresh surge in Covid-19 cases.

EasyJet was down 4.6 per cent on news it would close three of its bases in Britain, while Ryanair said it would reduce its flight capacity by a further 20 per cent during September and October.

"The trend of growing European new infections looks unlikely to abate for now and could continue to weigh on sentiment," analysts at Commerzbank wrote in a note.

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"We expect travel & leisure to be one of the last sectors to recover from the pandemic," they said.

However, the pan-European Stoxx 600 index ended 0.3 per cent higher, with miners jumping 1.7 per cent after fresh liquidity moves by the central bank in China, the world's top metals consumer.

Chipmakers also rose, while luxury stocks such as LVMH , Burberry and Kering climbed between 0.4 per cent and 1.9 per cent after Jefferies analysts said in a note that the strength of their businesses in China could help them to gain market share.

Pernod Ricard gained 3.3 per cent after Barclays upgraded the French spirits maker to "overweight."

Markets generally appeared to be in a holding pattern ahead of August business activity data later this week, which could shed light on the pace of an economic recovery, while the US Federal Reserve's policy minutes are also due on Wednesday.

France's Sanofi gained 1.2 per cent after it agreed to buy US company Principia Biopharma Inc for around US$3.7 billion. Healthcare stocks provided the biggest boost to the Stoxx 600.

Real estate firms took a hit as Europe's largest property firm Unibail-Rodamco-Westfield slid 4.9 per cent after a media report said it was considering rights issue. The company said no decision had been made.

REUTERS