Updates prices throughout, adds analyst comment

By Avinash P and Johann M Cherian

Feb 25 (Reuters) - European shares rose to a high on Wednesday, underpinned by a rebound in financials after British bank HSBC raised a key lending target, while concerns that newer AI models might imminently disrupt traditional businesses appeared to ease.

The pan-European STOXX 600 index .STOXX was up 0.47% at 632.08 points, trading just shy of the intraday-high of 632.40 hit earlier in the session.

Banking stocks .SX7P, .SX7E gained more than 1.7% each as broader global sentiment improved after U.S.-based AI startup Anthropic partnered with several companies and launched new AI plug-ins, signalling that traditional businesses are adapting to AI advances rather than facing immediate disruption.

Banks are often viewed as vulnerable to rapid technological change. Signs that companies are integrating AI in a measured way helped ease concerns about margin pressure and supported risk appetite, which typically benefits financial stocks.

Similar concerns have sparked bouts of volatility in global markets several times this year, with European banks posting sharp declines on Tuesday.

"Volatility is likely to persist in the near term as markets debate and ultimately seek to price the terminal values of companies that could be disrupted by AI, all while assessing the implications of Trump's shifting tariff targets," a group of strategists led by Mark Haefele at UBS said.

We "continue to like European equities against an improving cyclical outlook and a favorable backdrop, favoring banks, industrials, IT, and utilities sectors" Haefele added.

HSBC HSBA.L, Europe's largest lender, raised a key earnings target after its annual profit exceeded expectations, despite logging a $4.9 billion one-off charge sending its shares up 5.1%.

Onshore wind turbine manufacturer Nordex NDXG.DE jumped 15% after reporting better-than-expected core profit for 2025.

On the flipside, Diageo DGE.L lost 5.7% and weighed on the index after the beverage maker cut its annual sales and profit forecast for the second time in four months and also slashed its dividend. The broader food and beverages index .SX3P slipped 1%.

Edenred EDEN.PA shares lost 4% after a Brazilian judge sided with the government and overruled previous court decisions that had suspended changes to the meal voucher system.

Defence company Leonardo LDOF.MI reported a beat on its 2025 financial targets and said it was cutting down on debt. However, shares eased 1.1% temporarily from a multi-year rally.

Investors also monitored developments on the trade front with the possibility of new U.S. tariffs rising up to 15%. AI-chip giant Nvidia's NVDA.O results out of the U.S. later on Wednesday will be the next test for markets.

(Reporting by Avinash P and Johann M Cherian in Bengaluru; Editing by Sherry Jacob-Phillips and Shailesh Kuber)

((Avinash.P@thomsonreuters.com;))