European shares trade sideways; M&As eyed

European shares traded with little clear direction on Monday as markets focused on a flurry of M&A, with limited impact from the shutdown of the US government and progress towards an end to political deadlock in Germany.

At 0918 GMT the pan-European STOXX 600 index was flat (-0.02 per cent). Germany's DAX was down 0.1 per cent, France's CAC-40 was 0.2 per cent lower and the UK's FTSE was up 0.1 per cent.

French drugmaker

Sanofi fell 3.4 per cent after the company announced a $11.6 billion takeover of US haemophilia treatment specialist Bioverativ, with some traders saying the deal looked expensive. Kepler Cheuvreux analysts said the deal raised a “host of questions” and wondered whether Bioverativs pipeline could offset pressure from a rival Roche treatment.

Italian online luxury retailer

Yoox Net-a-Porter's shares surged 25 per cent, hitting a record after shareholder Richemont moved to buy out the company. Still in Italy, Mediaset was up about 5 per cent with traders citing an upgrade to “Buy” from Goldman Sachs.

Ocado jumped 13 per cent after it signed an agreement with Sobeys to develop the online grocery business at Canada's second-largest food retailer. UBS , Switzerland's biggest bank, saw its shares fall 2.5 per cent after reporting a quarterly loss, driven by a large writedown on the US tax reforms. UBS still boosted its dividends and announced a new share buyback programme.

UK betting groups were the worst performers on the STOXX 600, with William Hill and Ladbrokes down 14 per cent and 13 per cent, respectively, on a report that the government is set to cap maximum stakes on fixed-odds betting machines at 2 pounds ($2.8).

South African retailer Steinhoff rose over 11 per cent after it said it planned to sell about 7.5 billion rand ($620 million) of shares in investment firm PSG Group as it scrambles to plug a liquidity gap. British drugmaker Indivior jumped 6.3 per cent after a competitor for its Sublocade drug suffered a setback in the United States.

“It bodes well for Indivior and improves its positioning with the upcoming launch of Sublocade,” broker Jefferies said in a note.

The energy sector was the main contributor to the STOXX 600, with Total and Royal Dutch Shell rising 1 per cent and 0.8 per cent, respectively. Telcos were also up slightly, spurred by Deutsche Telekom which gained 1.3 per cent after its CFO flagged rising dividends.