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* Eurofins Scientific drops after Muddy Waters says short on co

* Germany's Hochtief tops STOXX on Jefferies upgrade

* STOXX 600 up 0.4%

June 24 (Reuters) - European shares advanced on Monday, shrugging off initial losses as automobile and bank stocks rose, while focus remained on the first round of French parliamentary elections later this week.

The pan-European STOXX 600 rose 0.4% as of 0838 GMT. Autos led gains with a 1.6% increase as the European Union and China agreed to hold talks on the planned imposition of tariffs on Chinese-made electric vehicles (EVs).

Euro zone banks added 0.9% with Italian lenders such as BPER, UniCredit and Monte dei Paschi di Siena gaining between 2.4% and 3.7%.

The focus will be on the first round of France's parliamentary elections this week, with polls showing a lead for the far-right National Rally (RN) party and its allies.

The French benchmark began the week 0.5% up.

Investors awaited commentary from at least four members of the European Central Bank (ECB) later in the day, including board member Isabel Schnabel, for clues on the central bank's monetary policy path.

On the data front, German business morale unexpectedly fell in June due to more pessimistic expectations of Europe's largest economy, according to a survey.

"The optimism at the start of the year has given way to realism. The (latest) readings have illustrated that the German economy is still struggling to gain more momentum," said Carsten Brzeski, global head of macro at ING.

Last week, data for June showed the upturn in German business activity over the past two months slowed, while a broader euro zone reading showed business growth slowed sharply.

European shares had recouped some losses last week, following the French election shock-induced drop earlier this month. However, a fizzling rally in technology stocks had kept gains in check.

Among other stocks, Hochtief advanced 8.7% as Jefferies upgraded the German construction firm to "buy" from "hold", citing the company's growing exposure to high-tech infrastructure projects.

Belgian pharmaceutical company argenx jumped 7.1% after it said the U.S. FDA approved Vyvgart Hytrulo, a treatment for chronic inflammatory demyelinating polyneuropathy.

UK's Prudential added 6.3% after the insurance group launched a $2 billion share buyback programme

On the flip side, Eurofins Scientific dropped as much as 19% after short seller Muddy Waters said it is short on the French testing company.

Germany's Zalando dropped 6.3% after Morgan Stanley cut the online retailer to "equal weight" from "overweight".

(Reporting by Shashwat Chauhan in Bengaluru and Jesus Calero in Gdansk; Editing by Sohini Goswami)