European shares set new 3-month high on M&A wave
* FTSEurofirst 300 rises 0.2 pct, sets 3-1/2 month high
* Merger and acquisition activity underpins markets
* Rhoen-Klinikum surges 11 pct on plans to sell hospitals
LONDON, Sept 13 (Reuters) - European equities advanced for a second straight week and recorded a new 3-1/2-month high on Friday, with merger and acquisition activity in the healthcare and media sectors underpinning the stock market.
German hospital chain Rhoen-Klinikum jumped 11.4 percent in surging volumes to become the best performer on the FTSEurofirst 300 index after saying it will sell most of its hospitals to Fresenius for 3.07 billion euros ($4 billion).
Rhoen-Klinikum's trading volumes were more than 10 times its 90-day daily average on the news, which also boosted Fresenius shares, up 3.6 percent.
Kabel Deutschland surged 6.3 percent, propelled by news that Vodafone had secured enough shares in the German cable company for its 7.7 billion euro takeover offer to succeed.
"In the current favourable environment, it's easier to convince the acquiring company to pay more so that the shareholders of the companies being taken over are more ready to accept," Ronny Claeys, senior strategist at KBC Asset Management, said.
"There are possibilities of more M&A activities," he said, adding sectors such as telecoms and pharma could see a pick up in merger deals.
The FTSEurofirst 300 index rose 0.2 percent to 1,250.26 points, the highest level since May. The index, which rose 1.7 percent this week after gaining 2.9 percent last week, is up more than 10 percent so far this year.
M&A deals, mostly in the tech, telecom and media sectors, have helped support European equities in the past few weeks, fuelling expectations of further takeover deals as the economy recovers.
"Now that companies have cut costs and cleaned up their balance sheets, they are full of cash and ready to gain market share, and given the slow economic growth, the best way to do that is by taking over other companies," Montaigne Capital fund manager Arnaud Scarpaci said.
According to Thomson Reuters Worldscope data, euro zone firms listed on the MSCI EMU have on aggregate about 800 billion euros in cash on their balance sheets.
Kabel Deutschland propelled the European media index , up 1.1 percent, to the top of the sectoral risers' list, but gains were offset by weakness in cyclical sectors such as miners and techs, down 0.9 percent and 0.5 percent respectively, on concerns of a cut in U.S. stimulus.
Investors were reluctant to take strong fresh bets ahead of the U.S. Federal Reserve's policy meeting next week. According to a Reuters poll, the Fed is likely to say it will curb its monthly spending on asset purchases by $10 billion.
The Fed's quantitative easing programme has been a major driver of the global equity rally over the past year, with the FTSEurofirst 300 up 32 percent since June 2012.
A Lipper poll of U.S.-based funds invested in European equities, which include exchange-traded funds' (ETFs) holdings, shows the funds added a net $797 million in the week, an 11th straight week of net inflows from U.S. investors.