London - 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 percent at 07h52 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 percent. 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 percent 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 percent, with the local banking sector jumping 15 percent. 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. Seventy-one percent of all open trading positions held by IG clients are bets the German DAX index will rise, he said.
The top gainers of the day among European shares were telecom stocks, with Bouygues up 14.6 percent after Monday's confirmation of a takeover bid from Altice via its Numericable-SFR subsidiary, which itself rose 14.5 percent.
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 percent after Ferrero International SA offered to buy the company at a premium of about 42.9 percent to its closing share price on Friday.
Reuters