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Europe shares close higher on M&A activity; new Russia sanctions

European shares closed higher Monday, boosted by mergers and acquisitions activity, although bullish sentiment was capped by ongoing events in Ukraine.

M&A activity

The pan-European FTSEurofirst 300 Index provisionally closed higher by 0.2 percent to 1,335.83 points at the start of the week.

A slew of corporate activity helping to pull bourses higher, despite fresh sanctions against Russia being announced by the United States.

A potential $100 billion-plus merger of two of the world's biggest pharmaceutical companies moved a step closer after Pfizer confirmed it had made a second approach to U.K. rival AstraZeneca. AstraZeneca shares surged 14.2 percent on Monday and helped the FTSE 100 to close higher by 0.2 percent.

Read MorePfizer confirms fresh AstraZeneca approach

Meanwhile, General Electric's chief executive, Jeff Immelt, met French ministers on Monday to discuss the U.S. company's bid for Alstom, amid news of a rival bid from Siemens of Germany. Trade in Alstom shares issuspended until Wednesday, but Siemens shares fell around 2.7 percent on Monday.

Read MoreFrench warn GE as Siemens plans Alstom hijack

U.S. stocks rose sharply on Monday, with equities bouncing back after the prior session's steep drop, as investors welcomed increased activity on the corporate deal-making front.

"The most intriguing driver of the marketplace is that companies have gone off the offensive and are putting cash back to work; you have to go back to the 1980s for this kind of deal activity," said Art Hogan, chief market strategist at Wunderlich Securities.

Read MorePick your M&A carefully: Some EU countries fight back

Symbol
Name
Price
 
Change
%Change
Volume
FTSE
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DAX
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CAC 40
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IBEX 35
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Ukraine weighs

Individual stocks news may have been the focus on Monday, but the backdrop of Ukraine still hung over markets. Russian shares fell 1 percent before managing to pare losses and close higher by 1.5 percent.

On Sunday, pro-Russian rebels in east Ukraine took several European military inspectors hostage and seized the headquarters of regional television station in the city of Donestsk.

The Obama administration imposed sanctions on seven Russian government officials and 17 companies linked to President Vladimir Putin on Monday.

Read MoreWhy you need to watch for a Ukraine 'flashpoint'

"The word coming from Capitol Hill and also Europe is that sanctions on Russian officials will be harder, more direct and onerous on President Putin's inner circle; this will disrupt normal trading conditions," Evan Lucas, a market strategist at IG Markets, said in a note.

Asian equities were mostly lower on Monday, with shares in Tokyo and Shanghai underperforming, amid rising geopolitical tensions over Ukraine.

Read More Obama announces new US sanctions on Russia

Bayer soars

On the data front, an Italian consumer confidence survey for April managed to beat expectations. The index soared to its highest since January 2010 with a reading of 105.4, versus a figure of 101.9 in March.

In other news, German drugmaker Bayer reported first-quarter profit that beat market expectations on Monday; shares rallied by 3.3 percent.

Read MoreBayer CEO: I don't feel the need to join M&A fever

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