Europe rallies by the close amid heightened expectations of US tax cuts; miners pop 2%

  • The pan-European Stoxx 600 finished up 1.15 percent provisionally, with all sectors ending in the black. Germany's DAX soared 1.59 percent.
  • Global markets have rallied this year, largely on the back of optimism regarding U.S. tax cuts. A vote on the legislation is scheduled for later this week
  • France's Thales announced it had agreed to buy Gemalto for around 4.8 billion euros

European stocks closed sharply higher Monday, amid heightened expectations that U.S. lawmakers could pass a long-awaited tax bill.

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The pan-European Stoxx 600 finished up 1.15 percent provisionally, with all sectors ending in the black. Germany's DAX soared 1.59 percent, surpassing other bourses, such as the U.K.'s FTSE 100 and France's CAC 40, which closed up 0.62 and 1.33 percent, respectively.

Europe's technology stocks were among the top performers on Monday, finishing up 1.51 percent amid dealmaking news.

French aerospace and defense group Thales announced Sunday it had agreed to buy chipmaker Gemalto for around 4.8 billion euros ($5.6 billion). In a joint statement, the two companies said they were aiming to create "a world leader in digital security." Both firms jumped to the top of the STOXX 600 on Monday, with Thales rising 8.15 percent and Gemalto popping 5.6 percent.

Meantime, basic resources was Europe's strongest sector, jumping 2.06 percent after BMO raised its price target on Anglo American and Glencore. Nickel and lead prices also posted sharp gains.

Looking at individual stocks, Vestas shares rose 4.2 percent, amid elevated hopes U.S. lawmakers could pass a tax bill before Christmas. Denmark's wind power firm, which has a large exposure to the U.S. market, is reportedly poised to benefit from a continuation of production and investment tax credits included in the overhaul.

Austrian residential property firm Buwog soared 17 percent, after the firm agreed to be taken over by rival Vonovia, in a deal which values the Austrian group at 5.2 billion euros ($6.12 billion). Vonovia rose over 1 percent.

Meanwhile, IG Group slumped to the bottom of the benchmark after a trading regulation announcement. Last week, European regulatory authorities proposed new restrictions on contracts for difference and although the online trader said the financial impact of these regulations was unlikely to be significant, its shares tumbled 9.27 percent.

H&M slipped 2.5 percent after a number of brokers cut their price targets on the retailer. Meantime, Ryanair fell over 3 percent after it was downgraded from "outperform" to "neutral" by Credit Suisse.

Tax overhaul

Global markets have rallied this year, largely on the back of optimism regarding U.S. tax cuts. The overhaul is seen boosting corporate profits, triggering share buybacks and resulting in higher dividend payouts — all to the benefit of shareholders. A vote on the legislation is scheduled for later this week.

Consequently, U.S. stocks rose sharply on Monday, with the Dow Jones industrial average rising more than 150 points around Europe's close, boosted by tax reform optimism.

In commodities, oil prices edged higher Monday afternoon, supported by an ongoing North Sea pipeline outage and prolonged OPEC-led production cuts. Around Europe's close, Brent crude traded around $63.47 per barrel, while U.S. crude was seen at $57.43.

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