* STOXX 600 up 1.2 pct
* Casino gains 3.7 pct on Amazon partnership
* H&M tumbles 5 pct after Q1 results (Adds closing prices)
By Helen Reid
LONDON, March 27 (Reuters) - European shares surged on Tuesday on incipient signs of a detente in trade rhetoric between Washington and Beijing, while French supermarket Casino was boosted by a grocery delivery partnership with Amazon.
European markets took their cue from a robust rebound on Wall Street that ran into its second day on Tuesday after reports the United States and China were negotiating to avert a trade war. marked a sharp bounceback from the previous days, in a sign that volatility was returning to stock markets.
"The volatility that we're seeing in markets reflects those who were initially fearful of the headlines, and those that see opportunities within that," said Chris Dyer, director of global equity at Eaton Vance.
Dyer remains overweight European stocks and underweight the U.S.
"What we see in Europe is valuations are lower, whereas the opportunity for margin expansion is more significant," he said, adding there is a "fair dispersion" between European and U.S. valuations.
He said he had added to some industrials stocks that had suffered due to the fear of trade wars.
Casino CASP.PA shares jumped 3.7 percent after its grocery chain Monoprix said it would start selling its products to Parisian customers through Amazon's AMZN.O Prime Now service this year. retail analyst Bruno Monteyne said the deal was unlikely to be a "game changer" to competition in the French grocery market.
"In the UK Amazon Prime Now has been selling Morrisons products for two years and is hardly measurable (0.07 percent of the UK market and growing at the paltry 50 percent)," he wrote in a note to clients.
Despite Casino's share price gains, the retail sector index .SXRP lagged the market. Amazon's expansion into Europe has struck fear into investors in some supermarket stocks seen as less adapted to a new retail environment.
A 5 percent fall in H&M shares HMb.ST also dragged retail stocks down. The Swedish fashion firm flagged further markdowns in the second quarter, reporting profits for Q1 fell roughly as expected. losses took H&M shares to their lowest in 13 years, around a third of their value at their peak in March 2015.
Akzo Nobel AKZO.AS shares gained 3.5 percent after the paint maker sold its specialty chemicals business to U.S. private equity firm Carlyle Group (NASDAQ: CG ) and Singapore's GIC for 10.1 billion euros ($12.6 billion) and said the bulk of the proceeds would go to shareholders. tech stocks, chipmaker ams AMS.S led gains, rising 3.5 percent, while peer Infineon IFXGn.DE rose 3.1 percent gain, and STMicro STM.PA climbed 2.5 percent.
These semiconductor stocks have been the best-performing of the tech sector, leading last year's equity rally.
Elsewhere, Zurich Insurance ZURN.S rose 1.5 percent, scoring its biggest two-day gain since June 2016 amid vague takeover chatter. Zurich was not immediately available for comment on the share price move. PE ratios across global markets
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