UPDATE 2-European stocks start the week strong on virus treatment hopes

* Energy stocks lead gains

* Spain’s Grifols jumps as U.S. authorises plasma treatment

* BT Group surges on report board to defend against takeover bid

* Travel stocks among the few decliners (Adds details, updates to close)

Aug 24 (Reuters) - European stocks marked their best day in nearly two weeks on Monday as signs of progress in developing a COVID-19 treatment offset fears about a resurgence in virus cases stalling an economic recovery.

The pan-European STOXX 600 index ended 1.6% higher, after the U.S. health regulator said on Sunday it authorised the use of blood plasma from patients who have recovered from COVID-19 as a treatment.

The day’s gains came after a lacklustre week for regional stocks, as a mix of low trading volumes, middling economic data and an uptrend in COVID-19 cases weighed on sentiment.

“The weekend’s vaccine news is at the fore,” said Keith Temperton, a sales trader at Forte Securities. “But we’re in this mid-summer volume vacuum, where the path of least resistance is higher.”

Spain’s Grifols, one of the world’s top producers of treatments based on human plasma, gained 1.6%.

AstraZeneca Plc rose 2.1% after the Financial Times reported the Trump administration was considering fast-tracking an experimental COVID-19 vaccine being developed by the company, while AstraZeneca marked further progress in the vaccine’s production.

Oil and gas was the best performing European sector, adding some 3.4% as crude prices gained on weather-related disruptions to supply.

Automobile, chemical and bank stocks also rose more than 2%.

British telecoms company BT Group jumped around 7% after a media report that its board was preparing to defend it against takeover approaches from rivals and buyout firms.

UK government data showed on Friday the average number of people that one COVID-19 infected person will pass the virus on to had risen and may now be above 1, indicating a risk that the overall epidemic is growing.

Similarly, Germany, France and Spain have seen a surge in virus cases, with their leaders looking at tightening travel restrictions.

“The way we’re looking at the COVID narrative seems to be changing. The market is looking at a better situation in terms of hospitalisation and death rates,” Temperton said.

Travel stocks were among the few percentage decliners for the day, as a rise in virus cases kept a recovery in the sector on shaky ground.

But Easyjet and Ryanair rose more than 3.5% each after brokerage UBS said it continued to prefer European airlines which are more focused on domestic markets rather than international ones, due to the pandemic. (Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D’Silva and Ken Ferris)