European shares hit their highest level in over a week on Monday as a glimmer of hope emerged for some progress on Greece’s debt crisis after months of wrangling with international creditors.
Blue-chip indexes in London, Paris and Frankfurt were all up between 1.4 and 2.8 per cent at 0752 GMT, with the telecoms sector outperforming after a takeover bid for France’s Bouygues Telecom reignited hopes for more corporate deals.
Athens’ standoff with international creditors has weighed on markets in recent months, rubbing the shine off European stocks after a rally driven by the European Central Bank’s pledge to buy bonds to revive economic growth.
The pan-European FTSEurofirst 300 index was up 1.9 per cent. The VSTOXX measure of European stock-market volatility slumped to its lowest level in 10 days.
“We remain of the view that the most likely outcome (with a 75 per cent probability) is a deal," Credit Suisse analysts said in a note to clients.
“An unfortunate but predictable feature of European crisis decision-making is that such deals are only ever made at the last minute, “at the edge of the abyss’’. That’s Monday.’’
Greek stocks were up 6.8 per cent, with the local banking sector jumping 15 per cent. Greek banks have been at the heart of the recent market sell-off, with investors worried that capital controls may end up being introduced to fight deposit outflows.
“(Monday) promises to be a crazy trading session,’’ said IG strategist Chris Weston. Some 71 per cent of all open trading positions held by IG clients are bets the German DAX index will rise, he said.
Top gainers of the day among European shares were telecom stocks, with Bouygues up 14.6 per cent after Monday’s confirmation of a takeover bid from Altice via its Numericable-SFR subsidiary, which itself rose 14.5 per cent.
British broadcaster Sky also gained after the Sunday Telegraph reported that the Murdoch family was said to have rebuffed two offers for its stake.
Deal hopes were also alive in the world of confectionery: UK chocolatier Thorntons jumped by a whopping 42 per cent after Ferrero International SA offered to buy the company at a premium of about 42.9 per cent to its closing share price on Friday.