UPDATE 2-European shares end higher as defensives find favour

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* Telecoms boosted by jump in Vodafone shares
* ProSiebenSat.1 Media surges as KKR builds stake
* Mood fragile as Wuhan reports new virus cases

(Updates to market close)
By Sruthi Shankar
May 12 (Reuters) - European shares finished modestly higher
on Tuesday, as telecom stocks surged after Britain's Vodafone
maintained its dividend, while defensive stocks were broadly in
favour as investors weighed risks from many countries starting
to lift lockdowns.
Britain's blue-chip FTSE 100 .FTSE outperformed its
continental European peers, rising 0.9% with help from a weaker
pound and upbeat earnings reports. Euro zone stocks .STOXXE
were up just 0.1%. .L
The pan-European STOXX 600 index .STOXX rose 0.3%, with
gains led by the telecoms, healthcare and utilities sectors that
investors often seek during times of economic uncertainty.
The world's second-largest mobile operator Vodafone VOD.L
jumped 8.7% as it retained its dividend, bucking a corporate
trend to cut or scrap payouts due to the coronavirus crisis, and
met expectations for full-year core earnings. "Given the dividend income starvation in Europe that is
currently being witnessed, we think income investors will like
the details on free cash flow and capital allocation," Neil
Campling, head of TMT Research at Mirabaud Securities wrote
about Vodafone's earnings.
Italian .FTMIB and Spanish benchmarks .IBEX , home to
several companies paying steady dividends, rose 1% and 1.4%
respectively.
Paris-based telecoms group Iliad ILD.PA gained 4.1% as it
kept its full-year targets, helping boost Europe's telecoms
index .SXKP to a near seven-week high. Modest gains across Europe came as global equities trod
water, as some hard-hit economies that relaxed restrictions
witnessed a surge in new coronavirus cases. MKTS/GLOB
The Chinese city of Wuhan, where the pandemic originated,
reported its first new cases since its lockdown was lifted.
South Korea and Germany also reported an acceleration in
infections earlier this week. "The key variables at the moment are recovery in economic
activity and the impact of getting people out of their homes on
the spread of the virus," said Toby Gibb, global head of
investment directing at Fidelity International.
"I think we will be (stuck between the two) for sometime."
After a strong rebound in April that helped the STOXX 600
climb 26% from March lows, European shares have lost some
momentum in May as investors fear the economic recovery may not
be as fast as thought.
German conglomerate Thyssenkrupp TKAG.DE slumped 15.3% as
it warned its operating loss could swell to 1 billion euros
($1.1 billion) in the current quarter due to the pandemic.
Checking gains on Germany's DAX .GDAXI , insurer Allianz
ALVG.DE dropped 3.2% after revealing that a key measure of
capital may fall below the company's target floor
level. Among other bright spots, German broadcaster ProSiebenSat.1
Media PSMGn.DE surged 13.3% to the top of STOXX 600 after U.S.
private equity house KKR KKR.N revealed that it had acquired a
stake of 5.2% in the struggling company. Logistics group Deutsche Post AG DPWGn.DE gained 3% as it
saw signs of business normalising in Europe after the pandemic
depressed global freight volumes in the first quarter.