LONDON: European shares extended their recovery rally on Monday thanks to bank stocks as dealmaking took centre stage again after a week of political tension in Italy and Spain.
Investors' concerns over rising trade frictions were trumped by very strong US jobs data on Friday. Europe's STOXX 600 took the lead of Asian markets climbing on the data, up 0.6 per cent while Germany's DAX rose 0.8 per cent.
News about mergers and acquisitions (M&A), particularly in the financial sector, drove the biggest moves. Dealmaking has been a key trend in equity markets globally this year, with the UK among the most active for deals.
The banks sector jumped 1.2 per cent, the strongest boost to overall gains, as investors priced in potential dealmaking activity and stronger economic data.
Unicredit shares rose 3.5 per cent and Societe Generale gained 2.6 per cent after the Financial Times reported the two were exploring a merger which many investors hope could pave the way to further consolidation in the sector.
British lender CYBG gained 3.2 per cent after it upped its offer for challenger bank Virgin Money by 7 per cent.
Outside of financials, Air France topped the STOXX with a 4.8 per cent gain after AccorHotels said it was considering to buy a stake in the French airline.
Accor fell 2.5 per cent on the news.
Italian and Spanish equities were the top gainers, having suffered a week of heightened uncertainty as Italian parties negotiated a government and Spain's Prime Minister was ousted.
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ET Markets
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