(Adds closing prices, quote from Erste strategist, UK construction data, FTSE, Steinhoff)
By Helen Reid and Georgina Prodhan
LONDON, Dec 4 (Reuters) - European stocks recovered strongly from multi-week lows on Monday after the U.S. Senate passed a tax package delivering significant fiscal stimulus, which investors had anticipated would give extra legs to the bull run in equity markets.
Gains in the U.S. dollar helped Germany's dollar-exposed DAX shoot up from a two-month low, up 1.5 percent. The euro's strengthening has weighed on earnings expectations for stocks across the euro zone this quarter.
The pan-European STOXX 600 gained 0.9 percent while euro zone blue chips jumped 1.3 percent, their best gains in more than two months.
Bank stocks, seen as the biggest beneficiaries of tax cuts, jumped 1.2 percent on the day. Allianz, BNP Paribas and Santander were among the largest boosts to the index, up 1.3 to 1.9 percent.
"It's not extremely new news but it's definitely helpful for equities and we assume they will be for quite some time the best-performing asset class," said Peter Szopo, chief equity strategist at Erste Asset Management in Vienna.
The top-gaining European sector was construction and materials, up 1.6 percent after data showed that housebuilding spurred a recovery in Britain's construction industry last month.
The biggest risers in the sector were Swedish builder Skanska, up 3.5 percent, Irish building-materials group CRH, up 2.8 percent, and manufacturing group Melrose Industries, up 2.4 percent.
Britain's own blue-chip FTSE 100, however, lagged continental peers, rising 0.5 percent off a 10-week low as sterling slipped after a hoped-for Brexit divorce deal failed to materialise.
Dialog Semiconductor tumbled 24 percent to a 17-month trough after the iPhone supplier said top customer Apple could be working on building its own power-management chips, though it said it saw no impact on its business next year.
Shares in furniture retailer Steinhoff dropped 9.8 percent after it said it would release unaudited results for its full fiscal year due to an ongoing criminal and tax investigation in Germany.
Reporting by Helen Reid; Editing by Matthew Mpoke Bigg