UPDATE 2-European stocks hover near record high with banks in lead

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* Credit Suisse continues slide
* German DAX races to all-time high
* STOXX 600 less than 1% away from record peak

(Adds comments, updates prices throughout)
By Sruthi Shankar and Shreyashi Sanyal
March 30 (Reuters) - European shares ended close to record
highs on Tuesday on hopes of a vaccine-driven economic recovery,
while investors looked past the fallout of a U.S. hedge fund
default that hit banking stocks a day earlier.
The pan-European STOXX 600 index .STOXX gained 0.7%,
trading less than a percent below its pre-pandemic peak.
Bank stocks .SX7P jumped 2.7%, rebounding after a 1% drop
on Monday, as U.S. and European government bond yields rose on
hopes of stronger economic growth and inflation ahead. GVD/EUR
Swiss lender Credit Suisse CSGN.S fell 3.1%, following its
near 14% slide in the previous session as it warned of "highly
significant and material" losses after the fund, named by
sources as Archegos Capital, defaulted on margin calls.
"Though Archegos uncertainties are still hanging over the
markets, European investors felt settled enough to push the
region's indices higher," Connor Campbell, a financial analyst
at SpreadEx, said in a note.
The German DAX .GDAXI rose 1.3% to scale a record high,
boosted by automakers and a 1.6% rise in Deutsche Bank
DBKGn.DE .
"If all goes well in the next 48 hours, it (the DAX) could
close out March above 15,000," said Campbell.
The benchmark STOXX 600 is on course to end the first
quarter with a near 8% gain - its fourth straight quarterly rise
- as global growth optimism overshadowed sluggish vaccination
drives in the euro zone and new coronavirus-related lockdowns.
Economically sensitive cyclical sectors such as autos, banks
and travel and leisure have been the top performers this quarter
as investors snapped up the cheap stocks on hopes that the
reopening of economies will spur growth in the sectors.
"The light at the end of the tunnel is getting brighter and
equities remain the top choice for investors despite the recent
turbulence and inflation fears," said Milan Cutkovic, market
analyst at Axi.
Data showed French consumer confidence rose unexpectedly in
March despite new restrictions to combat coronavirus contagion
in large areas of the country and the prospect of more curbs on
the way. Italian luxury puffer jacket maker Moncler MONC.MI rose
2.9% and Swiss watch group Swatch UHR.S gained 3.3% after
Deutsche Bank upgraded their stocks to "buy".
Defensive sectors such as utilities and healthcare fell,
while rising yields weighed on highly valued technology stocks.