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Europe: Shares lifted by gains in Germany and Greece

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[LONDON] European shares rose on Monday, bouncing back after two weeks of losses and supported by gains in Germany and Greece, with the Athens market advancing on expectations of progress in tackling Greece's debt burden.

The pan-European FTSEurofirst 300 index rose 0.5 per cent to 1,309.10 points, although it remains down 9 per cent so far in 2016.

Germany's DAX outperformed with a 1.1 per cent rise, as the International Monetary Fund (IMF) said it had become slightly more optimistic regarding the German economy.

The German government last month stuck to its forecast of 1.7 per cent for this year, despite a slowdown in emerging markets, with strong domestic demand replacing exports as the main pillar of Europe's largest economy.

Data on Monday also showed a rebound in German industrial orders.

"The indices appear to be rising on the continued goodwill from a 10 month-high in German factory orders figure, and the increased hopes of avoiding a Greek calamity over the summer," said Spreadex analyst Connor Campbell.

Greece's stock market rose 0.7 per cent, as euro zone officials turned their attention to tackling Greece's huge debt repayments, with a view to a deal on May 24.

The DAX received a further boost from carmaker Volkswagen, whose shares rose after activist investor TCI demanded that VW overhaul its "excessive" executive pay scheme in order to boost profits at the company.

However, mining and steel stocks slumped following disappointing data from China, a major metal consumer, with Anglo American and ArcelorMittal falling 13.8 per cent and 12.1 per cent respectively.

China's exports and imports fell more than expected in April, underlining weak demand and cooling hopes of a recovery in the world's second-largest economy.

Milan's blue chip index also fell 0.9 per cent, as shares in Banco Popolare slid amid expectations of weak first-quarter results and with its 1 billion euro (S$1.56 billion) cash call getting closer.

"The moderately positive developments in Greece are helping but uncertainty over the macro picture remains," said ActivTrades chief analyst Carlo Alberto de Casa.

REUTERS