Europe stocks extend rebound on Greece, deals after weekly jump

European stocks extended their highest level since May, with Italian equities rallying the most, on growing optimism over a resolution to Greece’s crisis and amid deals activity.

Dutch fertilizer maker OCI NV rallied 15 percent after CF Industries Holdings Inc. said it’s in preliminary talks about a combination with certain businesses of OCI. Aveva Group Plc jumped 27 percent after Schneider Electric SE agreed to merge its software business with the U.K. company.

The Stoxx Europe 600 Index advanced 0.5 percent to 407.8 at 10:17 a.m. in London. That’s its ninth day of gains, the longest streak since April 2014. Italy’s benchmark FTSE MIB Index rose 1.4 percent, the most among western-European markets. It’s heading for its highest close since 2009.

“It’s good to see that Greece is moving out of the headlines,” Alessandro Bee, a strategist at Bank J Safra Sarasin, said by phone from Zurich. “The worst has been avoided and the risk-aversion sentiment that dominated markets has definitely eased. More M&A activity is among things showing that confidence is returning.”

The benchmark gauge climbed 4.3 percent last week, the most since January, as Greece and its creditors reached an agreement paving the way for a new bailout and the European Central Bank increased emergency liquidity assistance to the country.

German Chancellor Angela Merkel held out the prospect of limited debt relief for Greece, where banks are reopening after three weeks. Greece gave the order to repay 6.8 billion euros ($7.4 billion) to creditors, the Finance Ministry said.

Italian Banks

Italian lenders posted some of the biggest gains in Europe, with Mediobanca SpA and Banca Monte dei Paschi di Siena SpA advancing more than 2.5 percent. Banks contributed the most to the Stoxx 600 rally on Monday.

While the Athens Stock Exchange remains shut, American depositary receipts of National Bank of Greece SA climbed 2.1 percent in European trading. An exchange-traded fund tracking Greek stocks added 1.7 percent.

Julius Baer Group Ltd. slipped 2.1 percent after Switzerland’s third-largest wealth manager said first-half profit declined after the bank took a provision to settle a tax dispute with the U.S.

The volume of Stoxx 600 shares changing hands was 31 percent lower than the 30-day average on Monday.

[Bloomberg]