Second Masters in maths after master's in physics: how does it help getting into PhD in Europe? How does it help doing a second master's in mathematics after doing first master's in Physics for getting a PhD in theoretical Physics in Europe?

Will it be helpful to compensate for a low GPA in Masters in Physics?

Does the reputation of the university (master's degree) really matters for the PhD admissions if one has got enough project experiences in the field from top institutions?
Nothing compensates your low GPA in Physics. I think you have to learn to live with that. But there are several ways to improve your competency for the PhD application in theoretical physics. First let me share my experience with the application procedure in Europe. 

In France, from my experience, there is a well structured process for PhD intake. Your application will undergo an initial screening using various criteria, one among them is the GPA, other is the masters thesis. Next step is the interview(expect several rounds). I had a completely different experience in Germany. I was offered a project associate position for 6 months as an entrance to the PhD, predominantly on the basis of my current work(master thesis) and the recommendation from my adviser. I know several others who had similar experience. I recommend you the following.


Find a shot term internship in the field of your liking. If you do really well such that you may get a publication or at least if the supervisor could give a good recommendation for your application, then you have good chances of getting admitted.
Have you considered the US? A great deal of research is going on there. Appear for GRE if your GPA meets the minimum requirements. I cannot say for sure a good GRE score alone can get you a position, guess someone from US could say more about that.
If the above options seem impractical, try applying for a MS in theoretical physics. There are some specialized MS offerings like astrophysics, photonics etc.
Do an independent research in the field of your taste. There is always a possibility for collaboration with others in the field if you could convince them you have the potential to be a researcher.


Bottom line

IMO, doing a masters in mathematics for the sole purpose to be a potential candidate for PhD in theoretical physics because you think you can't be one due to your low GPA is not a good idea. There are other options to consider. If you are really motivated to do math, nothing stops you.