European shares reach two-week high after NAFTA deal; autos rally

LONDON, Aug 28 (Reuters) - European shares rallied on Tuesday after the United States and Mexico reached a trade agreement, with autos enjoying another day of gains on an otherwise quiet day for company news.

The pan-European STOXX 600 index was up 0.3 percent by 0720 GMT, hitting a two-week high, while Germany's exporter-heavy DAX gained 0.3 percent.

Britain's FTSE 100 rose 0.6 percent following Monday's holiday, helped by a subdued sterling.

European autos posted some of the biggest gains, up 1 percent after the United States and Mexico agreed on Monday to overhaul the North American Free Trade Agreement (NAFTA) . That puts pressure on Canada to agree to new terms on auto trade and dispute settlement.

Mining shares were also big risers, up 1.3 percent.

Among individual stocks, shares in Danish brewer Royal Unibrew topped the STOXX with a 4.8 percent gain after the company raised its outlook for the third time this year.

Shares in Sydbank fell 5.8 percent, however, after the Danish bank reported second-quarter earnings.

(Reporting by Kit Rees, editing by Larry King)

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