London - Gains in Germany's DAX equity index and new signs of corporate takeover activity propped up European stock markets on Tuesday, enabling them to claw back lost ground.
The pan-European FTSEurofirst 300 index, which had fallen in the last two sessions from 6-1/2 year highs, edged back up by 0.1 percent to 1,385.05 points.
The euro zone's blue-chip Euro STOXX 50 index also advanced by 0.1 percent to 3,264.76 points while the DAX - which hit a record high of 10,033.74 points on June 10 - rose 0.2 percent to 9,906.63 points.
German carmaker Daimler rose 0.2 percent to give one of the biggest lifts to both the DAX and the FTSEurofirst 300 indexes, after data on Tuesday showed a 4.3 percent rise in European car sales in May.
European healthcare stocks were boosted by a 2.7 percent gain in UK pharma group Shire. It was boosted after Reuters reported that Shire had hired investment bank Citi as an adviser, expecting to receive takeover approaches following a wave of deals in the healthcare sector.
A resurgence of corporate merger and acquisition (M&A) activity has lifted European stock markets this year, in spite of lingering signs of economic weakness in the euro zone.
“Whenever you see some M&A, you have to buy the stock market,” said Toby Campbell-Gray, head of trading at Tavira Securities.
Over the last two sessions, European stock markets had retreated from multi-year highs as violence in Iraq pushed up the price of oil and knocked back airline and travel stocks.
However, many traders have said new economic stimulus measures from the European Central Bank should ensure that any pullback will be relatively short-lived, and the FTSEurofirst 300 remains up by 5 percent since the start of 2014.
“We may see a pullback for a couple of days, but in my view, it's nothing. This is a very strong bull market, and betting against it is a bad idea,” said Andreas Clenow, hedge fund trader and principal at ACIES Asset Management.