Recasts paragraph 1; updates with background, Goldman and Barclays comments from paragraph 2 onwards

May 14 (Reuters) - Goldman Sachs and Barclays raised their forecasts for Europe's STOXX 600 index on Wednesday, after a string of cuts last month, as renewed optimism following the U.S.-China trade truce lifted investor sentiment and eased concerns over a global recession.

Goldman lifted its 12-month target for the benchmark .STOXX to 570 points from 520, while Barclays hiked its 2025 year-end forecast to 540 from 490.

However, the index is already trading above Barclays' estimate. It closed at 545.17 points on Tuesday.

The upgrades follow an agreement between the U.S. and China on Monday to reduce tariffs on each other's imports for 90 days, with the U.S. lowering its tariffs on Chinese goods to 30% from 145% and China cutting duties on U.S. imports to 10% from 125%.

"Meaningful US-China tariffs de-escalation reduces recession risk," Barclays said, with Goldman echoing that view.

Goldman and Barclays had trimmed their forecasts for the STOXX 600 twice in April following Trump's reciprocal tariff announcement, with Barclays warning at the time that "setting a point forecast has little value at this stage."

On Tuesday, J.P.Morgan and Goldman reduced their odds of a U.S. recession, while Barclays said it does not expect the country to fall into a recession in the second-half of this year.

Despite the improved outlook, Goldman said the upside from for European equities is limited, citing relatively low earnings growth expectations and valuations that are no longer inexpensive versus historical averages.

Still, the brokerage raised its earnings-per-share estimates for the STOXX 600 to 0% from -7%, aided by strong first-quarter earnings.

Goldman also hiked its 12-month forecast for UK's benchmark FTSE 100 index .FTSE to 8,800 points from 8,500.

The STOXX 600 fell 0.52% to 543.03 in early trade on Wednesday, while the FTSE dropped 0.27% to 8,578.50.

(Reporting by Siddarth S and Akriti Shah in Bengaluru; Editing by Sherry Jacob-Phillips and Sonia Cheema)

((Akriti.Shah@thomsonreuters.com;))