China rally triggers gains in European cyclical stocks

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July 6 (Reuters) - European shares jumped in early trading on Monday, with a rally in China's markets setting an upbeat tone as investors banked on the world's second biggest economy to lead a recovery from the coronavirus crisis.

The pan-European STOXX 600 rose 1.7% by 0714 GMT, with stocks exposed to China, like carmakers, industrials, energy firms and luxury goods makers rising strongly, while banks also rallied.

The German DAX, London's FTSE 100 and France's CAC 40 all rose about 2%.

China's blue-chip index jumped over 5%, as investors stocked up on cheap funding to invest in an economy that analysts predict will recover faster and better than other major countries battling new waves of infections.

UK homebuilders Persimmon, Taylor Wimpey and Barratt Developments gained about 5% after reports that British Finance Minister Rishi Sunak planned to raise a property tax threshold, among other steps to reduce the economic toll of the health crisis.

Sonova, the world's biggest hearing aid maker, rose 5.4% after saying it would close some stores and cut jobs as it expects first-half results to only partially recover from the pandemic. (Reporting by Sruthi Shankar in Bengaluru; editing by Patrick Graham)