By Sruthi Shankar and Shreyashi Sanyal
Nov 19 (Reuters) - Growth-dependent cyclical stocks drove European shares to a four-year high on Tuesday as a temporary reprieve for China's Huawei from U.S. sanctions encouraged bets that the world's largest economies could reach a trade truce.
After a hesitant start, the pan-European STOXX 600 index .STOXX rose 0.5% to its highest level since July 2015, with cyclical sectors rallying. The index is now flirting with record highs hit in April 2015.
Automakers .SXAP rebounded from their worst session in six weeks as data showed passenger car registrations in Europe rose to their highest since 2009 in October, driven by robust demand in Germany and France, and a rebound in demand for Volkswagen VOWG_p.DE.
Volkswagen shares rose 2%, while trade-reliant miners .SXPP and industrials .SXNP gained between 0.9 and 1%.
The Trump administration on Monday issued a new 90-day extension allowing U.S. companies to continue doing business with China's Huawei Technologies Co Ltd HWT.UL.
The report soothed nerves after a report on Monday that said Beijing was pessimistic about the prospects of sealing a trade pact with Washington.
"The daily (gain) for stock markets shows investors are not necessarily buying the negative headlines," said Craig Erlam, senior market analyst at Oanda in London. "There seems to be a general feeling of when, rather if at all, a deal will be struck."
After a shaky few months for stock markets, worried by the prospect that the trade issues would drive the world economy into recession, third quarter corporate results over the last month have proved less bad than feared, fuelling a new rally.
Most sectors in the benchmark European index rose, with media stocks .SXMP one outlier due to a 19.7% slide for Luxemburg-based satellite provider SES SESFd.PA after Federal Communications Commission chairman Ajit Pai said he backed a public rather than private auction of spectrum for next-generation 5G wireless networks.
Another macro-driven sector, travel & leisure .SXTP, gained 1%, powered by a 3.8% jump in shares of Britain's easyJet EZJ.Lafter it posted full-year profit towards the top end of expectations.
In corporate M&A, shares in Germany's TLG Immobilien TLGG.DE rose 2.4% after announcing an all-stock merger with fellow real estate firm Aroundtown SA AT1.DE.
Halma Plc HLMA.L led gains on the FTSE 100 .FTSEafter the British safety equipment maker posted upbeat first-half results.
Intermediate Capital Group ICP.Ljumped 7.7% to a record high as the alternative asset manager posted robust first-half results and a 50% increase in dividend.
London's domestically focused midcap index .FTMC rose 1% after latest polling by ICM for Reuters showed Prime Minister Boris Johnson's Conservative Party had extended its lead over the opposition Labour Party in the past week.
(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Shounak Dasgupta and Patrick Graham)
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