(Reuters) - Renewed trade optimism helped prop up European shares in early dealings on Thursday, after a report said the United States and China have reached a tentative truce ahead of a highly anticipated G20 summit this weekend.

The South China Morning Post, citing sources, said Washington and Beijing were laying out an agreement that would help avert the next round of tariffs on an additional $300 billion of Chinese imports.

The pan-European STOXX 600 index <.STOXX> rose 0.16% by 0704 GMT, and Germany's trade-sensitive DAX <.GDAXI>, outperformed with a 0.53 jump.

The trade news helped Asian stocks gain overnight and eased investor nerves heading into talks between the two sides to resolve a dispute that has dominated stock market thinking for the past year.

Auto shares <.SXAP> rose 0.9% and basic-resources stocks <.SXPP> gained 1.3% as the tariff reprieve triggered relief for companies most at risk from slower global trade.

The biggest gainer on the STOXX 600 index was H&M , up 9.0% after the Swedish fashion retailer said sales of its summer collections had gotten off to a good start and that it was selling more clothes at full price.

(Reporting by Amy Caren Daniel and Medha Singh in Bengaluru; Editing by Bernard Orr)