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Europe: Shares supported by oil bounce; cybersecurity stocks gain

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[MILAN] European shares edged higher on Monday, helped by a bounce in oil prices and fresh dealmaking activity, while a global hacking attack boosted shares of software security firms.

The pan-European STOXX 600 index was up 0.1 per cent at its close. Both Germany's DAX and the UK's FTSE were up 0.3 per cent and hit fresh record highs earlier in the session.

Oil prices jumped more than 2 per cent after top exporter Saudi Arabia and Russia said supply cuts needed to last into 2018, a step towards keeping an Opec-led deal to support prices in place longer than originally agreed.

That helped commodity-related stocks with the basic resources and oil indexes climbing 1.7 per cent and 0.9 per cent respectively.

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Some investors said after three straight weeks of gains for European equities, the mood was dampened by Friday's unprecedented "ransomware" attack that hit 200,000 victims in at least 150 countries. "The risk sentiment is dull due to cyber uncertainties,"said London Capital Group analyst Ipek Ozkardeskaya.

SECURITY SHARES BOOSTED

The attack, however, boosted shares in software security firms. A cybersecurity exchange-traded fund ISE jumped more than 3 per cent, while London-listed shares in cloud network security firm Sophos popped more than 7 per cent higher to hit a record level.

In Helsinki, digital security firm F-Secure rose 3.8 per cent to a 16-year high, while information security consulting Nixu gained 2.4 per cent.

"Security is a growing business already and these kinds of news will accelerate the need for improvement of cybersecurity among companies," said Kim Gorschelnik, head of research at Finnish asset manager FIM.

Outside of tech stocks, Italian motorway company Atlantia rose 2.5 per cent after it launched a 16 billion euro bid for Spanish rival Abertis, whose share were little changed.

Banca Akros analyst Francesco Sala lifted its recommendation on Atlantia to accumulate from neutral, saying he expected the offer could lift the group's earnings per share by 30 per cent.

Shares in RWE rose nearly 4 per cent after the German utility posted core profit slightly above expectations, pointing to cost cuts and improved utilisation at its power plants division.

A poor earning update, however, hit shares in TUI, which fell 4.8 per cent. Europe's largest tour operator said summer trading was in line with expectations with demand for Spain, Greece and the Caribbean helping to offset subdued bookings for Turkey and North Africa.

Earnings in Europe have been surprisingly strong so far. According to Thomson Reuters data, more than 70 per cent of MSCI companies have reported results so far with 66 per cent beating expectations and 8 per cent meeting them, pointing to growth in first-quarter earnings of 20.2 per cent.

REUTERS

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