UPDATE 2-European stocks extend gains for third day, political woes hit Italy

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* Investors bet on bigger fiscal package by Joe Biden
* China reports better-than-expected export growth
* Italian stocks lag on political turmoil

(Updates to market close)
By Sruthi Shankar
Jan 14 (Reuters) - European shares rose for a third straight
session on Thursday, as a jump in technology stocks, hopes of a
large stimulus under incoming U.S. President Joe Biden and
upbeat Chinese export data boosted sentiment.
The pan-European STOXX 600 index .STOXX rose 0.7%, hitting
new highs since February 2020, with mining .SXPP , auto .SXAP
and travel .SXTP stocks among the top performers.
Biden is expected to unveil a stimulus package proposal
later in the day, designed to jumpstart a pandemic-struck U.S.
economy with an economic lifeline that could exceed $1.5
trillion. Chinese exports grew more than expected in December, data
showed, while Germany's economy shrank by a
smaller-than-expected 5.0% in 2020 as a strong state response
helped limit the havoc caused by the COVID-19 pandemic.
Still, investors were worried the latest coronavirus
lockdowns in Europe could further slow a recovery even as
vaccination programmes began. "We came into the year with a view that vaccines will kick
in over the first half of the year and economic growth should
bounce back materially. Obviously that is more biased to the
second half of the year," said Nick Peters, multi-asset
portfolio manager at Fidelity International.
"An uncertain start to the year was within our expectations,
and as long as we can see mobility data, PMIs beginning to
improve over the year, we're going to be comfortable with the
risk position that we've taken."
European chipmakers received a boost after Taiwan's TSMC
2330.TW posted a record high quarterly profit due to demand
for devices requiring high-end chips. Semiconductor equipment makers ASMI ASMI.AS jumped 7.6%
and ASML ASML.AS rose 5.9%, while the wider tech index .SX8P
was up 1.9%.
Finnish telecom network equipment maker Nokia NOKIA.HE
jumped 5.0% after announcing mutiple 5G deals with companies
including Alphabet's GOOGL.O Google and T-Mobile TMUS.O .
Political worries hit Italy's FTSE MIB .FTMIB , down 0.5%,
after former premier Matteo Renzi withdrew his small Italia Viva
party from the ruling coalition, sinking Prime Minister Giuseppe
Conte's government on disagreements over funding. Shares in Italian lenders .FTIT8300 , whose big sovereign
bond portfolios makes them sensitive to political risk, fell
0.9%.
"While not our base case, early elections look possible and
would likely lead to a new government less aligned with the EU,"
analysts at Morgan Stanley said in a note.
Carrefour CARR.PA slipped 2.5% after the French government
took a tough line against any takeover of the retailer by a
foreign company in the wake of a $20 billion bid approach by
Canadian convenience-store operator Alimentation Couche-Tard
ATDb.TO . Swiss plumbing supplies maker Geberit GEBN.S dropped 5.6%
after it revealed a hit to sales from the surge in value of the
franc during 2020.