M&A rumours in telecoms lead Euro shares higher
EUROPEAN equities extended gains this morning, led higher by telecom shares after the sector was buoyed by fresh mergers and acquisition talk.
The sector rose 1.6pc, helped by a 2.2pc rise in shares of Spanish telecoms company Telefonica after a report in newspaper El Mundo that the government had blocked a €70bn tender offer from AT&T for the company.
However, oil and gas shares fell 0.1pc after a 22pc drop in shares in Europe's biggest oil service group, Saipem, after the company issued its second profit warning in less than six months late on Friday.
Investors were also trading cautiously ahead of any comment from US Federal Reserve Chairman Ben Bernanke after its June 18-19 policy meeting.
"If Bernanke's comments help calm rumours that monetary (policy) tapering is not imminent, then we could see a short-lived rally in the market. But these concerns will resurface soon as US monetary easing could be scaled down in the second half," Christian Stocker, equity strategist at UniCredit in Munich, said.
"We have a risk that the market could fall 3 to 5pc in the summer months."
At 0722 GMT, the FTSEurofirst 300 index of top European shares was up 0.5pc at 1,181.76 points after rising 0.2pc in the previous session.