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Europe stocks gain amid Greece optimism as Hsbc, Volkswagen rise

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[LONDON] A Greek stock rally sent European shares higher as the nation reshuffled its bailout-negotiating team.

The Stoxx Europe 600 Index rose 1 per cent to 412.42 at the close of trading. Greece limited the role of Finance Minister Yanis Varoufakis in talks with creditors after euro-area counterparts criticized him at a meeting on Friday, when they refused to disburse more aid until terms are met.

Europe's benchmark gauge reversed losses of as much as 0.7 per cent after Bild reported Greek Prime Minister Alexis Tsipras is willing to suspend minimum-wage plans and make other changes to reform proposals. Greek stocks jumped the most in two months amid signs of compromise before its payments due to pensioners and state employees this week, and to the International Monetary Fund on May 6.

"Stocks quickly reacted to news that Tsipras is willing to abandon one of his pre-election pledges," said Ramiro Loureiro, a Lisbon-based market analyst at Banco Comercial Portugues SA's Millennium unit. "Markets clearly see this as a sign that Greece is moving closer to the euro group." National Bank of Greece SA and Alpha Bank AE surged more than 8 per cent, pushing the ASE Index up 4.4 per cent.

HSBC Holdings Plc contributed the most to gains on the Stoxx 600, rising 3.1 per cent after a report that it's considering spinning off its UK retail bank for about 20 billion pounds (US$30 billion). Volkswagen AG pushed carmakers to the best performance among Stoxx 600 groups, up 5.3 per cent after its chairman resigned from all his posts.

Cap Gemini Cap Gemini SA surged 7.9 per cent after agreeing to buy Igate Corp for about US$4 billion in cash. Mediaset SpA climbed 8.2 per cent as a report said Vivendi SA is studying a purchase of the Italian broadcaster and a controlling stake in French film producer EuropaCorp., which soared 20 per cent.

Swedish Orphan Biovitrum AB surged 19 per cent after the maker of drugs for rare diseases said it's reviewing a preliminary takeover offer. Sandvik AB climbed 9.5 per cent after the Swedish industrial group said currency effects will boost second-quarter profit by about 900 million kronor (US$104 million).

Deutsche Bank AG tumbled 4.6 per cent after scrapping a profitability goal for next year and setting a lower target in the medium term.

The Stoxx 600 increased 1.2 per cent last week amid corporate earnings and gains in mining shares after China boosted stimulus measures. The gauge has surged 20 per cent in 2015 and last reached a record on April 15.

BLOOMBERG