(Reuters) – European stocks finished a new high on Monday, as increased transactions and a string of strong financial sector earnings helped markets get off to a good start to August.
The pan-European STOXX 600 index rose 0.6% to close at a record high of 464.45 points, with retail and tech stocks outperforming.
British aeronautical engineer Meggitt climbed 56.7% to the top of the STOXX 600, reaching an all-time high after US industrial firm Parker-Hannifin announced it would buy the British rival in a deal valued at 8.76 billion dollars.
Among other deals, UK asset management service provider Sanne Group jumped 7.6% after saying it could secure a takeover bid from fund manager Apex Group.
German real estate company Vonovia rose 2.2% as it launched a watered-down € 19.1 billion ($ 22.7 billion) bid to buy rival Deutsche Wohnen.
Axa, Europe’s second-largest insurer, rose 4.2% after recording a 180% increase in its net income in the first half of the year.
German rival Allianz fell 7.8% after US regulators launched an investigation into Allianz Global Investors structured alpha funds.
Asia-focused lender HSBC edged down 0.3%, even after beating first half pre-tax profit guidance and resuming dividend payments.
Of more than half of the STOXX 600 companies that have released second quarter results so far, 67% have beaten earnings estimates, according to IBES data from Refinitiv.
“After hitting historic highs after first quarter results, the scale of positive EPS revisions in Europe remains very strong both in absolute terms and relative to its peers,” said European equity strategists at Morgan Stanley in a note. “Europe is now experiencing the best earnings revisions of any region in the world. “
Optimism over European earnings and economic reopening helped the benchmark STOXX 600 at the end of July with a sixth consecutive month of gains despite concerns over inflation, spike in virus cases in Asia and a major regulatory crackdown in China.
Chart: STOXX 600 climbs to a new peak,
At the same time, a survey showed that manufacturing activity in the eurozone continued to grow at a breakneck pace in July, but supply bottlenecks spiked input costs.
UK jets and auto parts supplier Senior Plc jumped 9.3% after reporting a first-half profit compared to a loss a year earlier.
Peer Melrose gained 5.2%, while Rolls-Royce rose 3.8%.
The world’s second-largest brewer, Heineken, edged up 0.6% after posting better-than-expected first-half profits, but warned rising commodity costs would squeeze margins.
German automaker Daimler rose 1.5% after Goldman Sachs added the title to its condemnation list.
Reporting by Sruthi Shankar and Ambar Warrick in Bengaluru; Editing by Sriraj Kalluvila and Richard Chang