MILAN (Reuters) – European shares rose on Monday, with merger and acquisition activity in focus and investor sentiment buoyed by expectations that a U.S. tax bill could soon pass.
Thales (TCFP.PA) rose 8.4 percent after the French aerospace and defense company agreed to buy chipmaker Gemalto (GTO.AS) for 4.8 billion euros. Gemalto shares rose 5.4 percent.
“It’s a healthy premium and it looks like the sort of deal the Gemalto board will be happy with,” said Chris Beauchamp, chief market analyst at IG.
Analysts at UBS said the deal would help Thales accelerate its strategy toward digital technologies and lift its earnings.
Both stocks were among the biggest gainers on the pan-European STOXX 600 index, which rose 0.9 percent to its highest in nearly six weeks.
H&M (HMb.ST) fell 4.7 percent, staying under pressure after a series of price target cuts that followed a disappointing trading update last week.
“We sense things will get more difficult and there is more bad news coming through. It’s hard for them to compete in the shift online,” said Beauchamp.
Sales at the fashion chain unexpectedly fell in the past quarter as it attracted fewer shoppers to its stores, underlining its struggle to adapt to a shift to online retail.
The STOXX is up more than 7 percent so far this year and remains below a two-year peak hit at the start of November on profit taking and resurfacing worries over political risks in the region.
Sentiment was supported on Monday by expectations that U.S. lawmakers will pass a tax bill in the coming days or early next year.
Vestas (VWS.CO) shares were up nearly 5 percent as the bill preserves key tax credits that had been at risk of being removed.
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