* Flutter shares soar on further rapid U.S. growth
* Travel stocks lead gains
* STOXX 600 set for weekly rise, erasing last week's losses (Updates to market close; adds comment, details)
By Shreyashi Sanyal and Anisha Sircar
Aug 12 (Reuters) - European shares rose on Friday after drugmakers rebounded following a slump in the previous session, and Flutter fanned a rally in the travel and leisure sector after an upbeat earnings forecast.
Shares in GSK, Sanofi and Haleon rose between 0.8% and 3.6% after the drugmakers said that nothing material had changed regarding U.S. litigation focused on heartburn drug Zantac.
The stocks had fallen sharply this week on concerns over potential cancer-causing impurities that prompted the drug's withdrawal from markets.
The European healthcare sector gained 0.2%, with the STOXX 600 index also rising 0.2%.
"We raise (European) pharma from marketweight to overweight, as our macro projections imply scope for 10%+ outperformance by the first quarter next year after the sharp recent pull-back," said Sebastian Raedler and Thomas Pearce, investment strategists at Bank of America.
But any rallies in the STOXX 600 are not likely to last, they added. "The main prerequisite for a sustained rally is a trough in the macro cycle and renewed acceleration in growth momentum, but growth headwinds remain considerable."
Euro area PMI is likely to be weaker due to tightening credit, and low Russian gas deliveries raise the risk of winter rationing, which could tip the region into recession, the strategists added.
A European bank agreed to process a payment for the transit of Russian oil through Ukraine, sources said, removing the cause of a stoppage of oil supplies to central Europe last week.
Meanwhile, travel & leisure stocks jumped 3.9% to more than two month highs, leading sectoral gains.
Flutter surged 14.4% to the top of the travel index, as it saw no sign of cash-strapped customers betting less and gave another positive update on its rapidly growing U.S. business.
Irish stocks added 2.7%, boosted by Flutter.
The STOXX 600 index, up for a third straight day, notched weekly gains of 1.2% as positive earnings and a softer-than-expected U.S. inflation reading calmed nerves around aggressive rate hikes by the Federal Reserve, though concerns remain over policymakers' path.
European shares have fallen 9.6% so far this year compared with a nearly 11% decline for Wall Street's S&P 500 index , which was largely dragged down by drops in big growth stocks in the first half of the year.
London stocks gained 0.5% after data showed Britain's economy contracted by less than feared in the second quarter.
Roche rose 1.6% after the drugmaker received approval from the U.S. Food and Drugs Administration for its Xofluza drug to treat influenza in children aged five years and older.
(Reporting by Shreyashi Sanyal, Anisha Sircar and Sruthi Shankar in Bengaluru Editing by Saumyadeb Chakrabarty, Sriraj Kalluvila and Barbara Lewis)