M&A, mining and oil stocks push European shares

European stocks closed higher yesterday, led by merger and acquisition activity, by oil shares as the oil price rose to an 11-month high and by miners on a rally in metal prices.

French food group Danone said it planned to pay 12.3 billion euros for Dutch rival Numico.

Numico shares had risen almost 11 per cent to a six-year high before they were suspended earlier yesterday as traders cited market talk of Danone's interest. Danone shares closed 3.3 per cent lower. The pan-European FTSEurofirst 300 index closed 0.35 per cent higher at 1,625.52 points after earlier touching 1,629.5, its highest level since June 18.

"Today the market was mainly driven by recommendations and takeover rumours," said Anne-Kristin Yasuda, a strategist at Landesbank Berlin.

"The market will now focus on the first earnings in the United States. They will be eyed anxiously," she added.

Alcoa, the world's largest aluminium producer which traditionally kicks off the US earnings season, is due to report second-quarter results after yesterday's market close. Around Europe, Germany's DAX index ended 0.36 per cent higher, Britain's FTSE 100 index added 0.34 per cent and France's CAC 40 was almost flat, closing 0.03 per cent higher.

The Austrian ATX index rose to a new all-time high on the back of gains in Telekom Austria, which closed up 3.1 per cent.

The telecoms company raised its forecast for core earnings growth over the next three years, saying increased volume and cost cuts would more than offset the impact of regulatory price cuts.

Oil prices rose to above $76 a barrel as rising global oil demand and North Sea field maintenance exacerbated supply worries. Total rose 0.7 per cent, and BP gained 0.3 per cent.

Miners ranked among the biggest gainers, advancing along with higher metal prices and after an upbeat note from JP Morgan on the outlook for commodities.

The increases included Antofagasta up 2.7 per cent, Xstrata 2.9 per cent, BHP Billiton 1.8 per cent and Anglo American 1.7 per cent.