European stocks rebounded from 2015’s worst five-day decline as deal activity increased and some corporate earnings topped projections.
Melrose Industries Plc surged 9.6 percent after agreeing to sell its Elster business to Honeywell International Inc. Hikma Pharmaceuticals Plc jumped 12 percent after saying it will buy Boehringer Ingelheim GmbH’s Roxane unit. RSA Insurance Group Plc soared 18 percent as Zurich Insurance Group said it’s evaluating a potential offer for it. Kering SA and Drax Group Plc rose 5.6 percent or more after first-half profits beat projections.
The Stoxx Europe 600 Index added 1.1 percent to 390.02 at the close of trading. It trimmed gains of as much as 1.4 percent after data showed a decline in U.S. consumer confidence. The benchmark gauge is still up 2.3 percent in July, heading for the biggest monthly increase since February.
“These deals and potential deals may be seen as a positive development for the market,” said Stephane Ekolo, chief European strategist at Market Securities in London. “More M&A activity means corporates are a bit more positive on the development of the economy. If you think the economy will contract, you don’t go on a shopping spree. The European economy is recovering and we are in a good spot.”
The Stoxx 600 rose for the first time in six days, after falling 5.1 percent in the five days through yesterday, giving up more than half of a rally sparked by Greece’s agreement with creditors. Commodity producers rebounded from a seven-day slump of 11 percent, leading gains among industry groups today.
Among other shares rising on takeover news, GKN Plc jumped 7.3 percent after agreeing to buy Fokker Technologies Group BV. Gerresheimer AG soared 12 percent after agreeing to buy Centor US Holding Inc. from Nemera Development SA.
Italy’s FTSE MIB Index climbed 2.3 percent, the most among western-European markets. Luxottica Group SpA advanced 3.4 percent after the world’s largest eyewear maker reported record second-quarter revenue and earnings.
Statoil ASA rose 1.4 percent after earnings that beat estimates. Michelin & Cie. slid 6.1 percent after Europe’s biggest tiremaker reported first-half operating profit that trailed analysts’ estimates.