EUROPEAN stock markets have risen as investor sentiment was boosted by vast merger and acquisition deals in the advertising and pharmaceutical sectors, dealers say.
In late morning deals on Monday, London's FTSE 100 index of leading shares added 0.25 per cent to 6,571.02 points and Frankfurt's DAX 30 advanced 0.26 per cent to 8,267.29 points.
In Paris, the CAC 40 climbed 0.30 per cent to 3,980.74 points compared with Friday's close.
The euro edged higher to $US1.3288 from $US1.3278 in New York late on Friday and the US dollar rose to Y97.95 from Y98.20.
On the London Bullion Market, the price of gold rose to $US1,330.70 an ounce from $US1,331 on Friday.
French group Publicis and its US rival Omnicom announced on Sunday the merger of the two advertising giants in a blockbuster deal to form a global leader in the sector.
The new group, in which the capital will be split 50-50 between the shareholders of the two companies, will be called the Publicis Omnicom Group, combining the current second- and third-largest advertising firms, worth about $US35.1 billion ($A38.06 billion).
Shares in Publicis, which is listed on the CAC 40, are suspended until 2330 AEST when the US stock market opens.
"The tie up between Omnicom and Publicis creates the world's largest ad agency with combined revenues of $US23 billion, but perhaps equally importantly demonstrates that in some quarters at least, the M&A space is still alive and well - even entering into the traditionally quieter summer months," said Matt Basi, head of UK sales trading at CMC Markets.
"Any sign that deals of this nature are back on the table might give bulls the required impetus to push equity markets to new highs."
The huge deal will bring together such top ad agency brands as Saatchi & Saatchi, Leo Burnett, Razorfish, BBDO and Ketchum, to name a few. Their clients include such major producers as Nike, LVMH and Nestle from Publicis, and Volkswagen, Unilever and ExxonMobile from New York-listed Omnicom.
"We are talking about industry where mergers seem to be natural occurrence, but this one is a giant one," added analyst Anita Paluch at Gekko Markets.
"It relies primarily, as all major mergers do, on the premise that synergies will be achieved and costs will be cut.
"This in turn should help them to be more active in Asian and Latin American markets to counterbalance the weak growth in Europe."
The new entity, which is subject to anti-trust approvals, will leapfrog the WPP group as market leader. However, WPP shares were showing a gain of 1.62 per cent to 1,194 pence.
In Paris, shares in French advertising group Havas rose by 5.84 per cent to 5.72 euros, with analysts saying that the scale of the deal would trigger reviews and negotiations of contracts which would raise opportunities for other big ad groups to gain business.
Markets won a further M&A boost on Monday after US drugs company Perrigo agreed to buy Irish biotech firm Elan for about $US8.6 billion in cash and shares.
The purchase is aimed at creating a global group with the strength to pursue expansion, and a new holding company will be based in Ireland.
Basi added: "Perrigo's $US8.6-billion acquisition of Irish pharmaceutical group Elan, coupled with news of the Omicom/Publicis tie-up, lends support to the argument that the M&A space may yet grind back into life.
"If CEOs continue to see value in equity markets at these levels, we may yet see traders pushing stocks to new high in anticipation of more deals on the horizon."
On the downside in London, British bank Barclays topped the FTSE 100 fallers board after revealing that it would update the market on its capital position on Tuesday.
The Sunday Times newspaper had reported that Barclays was exploring a STG4.0 billion ($A6.69 billion) rights issue to meet regulators' concerns over its financial strength.
In reaction, however, Barclays shares slumped 3.58 per cent to 308.7 pence.
In Paris, shares in nickel mining group Eramet plunged 7.65 per cent after the company reported a net loss for the first quarter.
Shares in spectacle lens leader Essilor rose by 3.97 per cent because the firm has done a deal to buy all of US firm Transitions Optical and sunglass lens-maker Intercast.
Shares in German industrial conglomerate Siemens were up by 0.14 per cent at mid-day to 79.82 euros. Over the weekend the company said that it would replace chief executive Peter Loescher who has been criticised for missing targets.
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