Banks, Miners Lift Euro Shares, Roche Drags
Gains in financial stocks lifted European shares on Monday as markets cheered Bank of America'sstronger-than-expected quarterly results, while declines in Roche offset some of the gains.
The Swiss drugmaker fell some 5 percent and was the heaviest negative weight on the pan-European FTSEurofirst 300 index after it offered to acquire all outstanding shares in its U.S. partnerGenentech for $43.7 billion.
Genentech's shares rose 12.4 percent in the United States.
The pan-European FTSEurofirst 300 index closed 0.5 percent higher at 1,170.16 points, ending higher for the fourth session in a row.
The index gained around 3.2 percent last week, rallying after quarterly results from Citigroup and Wells Fargo calmed fears over banks' balance sheets.
Bank of America, the second-largest U.S. bank, became the latest major bank to exceed Wall Street estimates, suggesting the financial sector may be stabilizing. Its shares rose some 8 percent.
"These are some good results from Bank of America and it calms the market," said Joerg Rahn, economist at MM Warburg.
"It's a relief that not everyone is doing badly, that not all banks are hit badly by the crisis," he added.
The DJStoxx European banks index rose 0.9 percent with ING up 3.5 percent, Royal Bank of Scotland up 2.7 percent and UBS gaining 2.2 percent.
Shares in HSBC rose 2.6 percent after the Daily Telegraph reported that the bank's chairman had met officials from the China Investment Corporation (CIC) in recent months discussing among other things the possibility of a fund buying HSBC shares in the open market. CIC officials were not available to comment.
Adding to broader gains were mining shares and the DJStoxx European Basic Resources index rose 2.1 percent with German steel and metals trader Kloeckner & Co up 5.4 percent after it announced it would sell its KVT unit.
Elsewhere in the sector Rio Tinto added 3 percent, Kazakhmys gained 4.6 percent, and BHP Billiton rose 2.9 percent, as traders said the market expected strong results in coming weeks.
Shares in Switzerland's Roche dropped 4.8 percent, briefly hitting a two-month low, on expectations that it may need to raise its $89-a-share offer for the remaining stake in Genentech, in which it already owns 56 percent.
"The Genentech bid makes perfect sense although we regard an upgrade to the offer price as needed for the transaction to be successful," said Martin Voegtli, analyst at Sal. Oppenheim.
Across the Atlantic, Merck and Schering-Plough said they would delay release of company earnings until after the U.S. stock market closes on Monday, in order to update investors on a new important study of their shared Vytorin cholesterol fighter.
The market reaction was negative and Merck shares were down 3 percent at one point, and Schering-Plough stocks dropped 9.4 percent.
British lender HBOS was among the strongest decliners in the FTSE 100, falling 6.2 percent as investors took just 8.3 percent of the shares in HBOS' 4 billion pound ($7.99 billion) rights issue.