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Europe: Shares led higher by mining sector and spate of M&A deals

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[MILAN] European shares rose on Monday, led by mining stocks and a spate of dealmaking activity.

Investors stayed cautious ahead of Wednesday's Dutch election and an expected US rate hike, as well as a G20 finance ministers' meeting on Friday.

The pan-European Stoxx 600 index closed up 0.4 per cent, notching up a fourth day of gains. The basic resources index was the biggest sectoral gainer, rising 2.9 per cent to snap a seven-day losing streak after copper prices surged on a soft dollar and supply disruptions.

London-listed miners Rio Tinto, Anglo American , Antofagasta, Centamin and Fresnillo all rose by between 4 per cent and 5.7 per cent.

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ArcelorMittal was up 4.7 per cent.

Oilfield engineering firm Amec Foster Wheeler rallied 11.6 per cent, topping gainers on the Stoxx 600, after larger rival firm John Wood Group proposed a recommended all-share offer worth £2.2 billion (S$3.8 billion).

The prospect of that deal lifted John Wood shares, which pared gains to close just 1.4 per cent higher, and buoyed shares in oilfield services firms across in Europe.

"We see this as a significant transaction for Wood Group, which increases the business's diversity across sectors with the opportunity to realise significant synergies," RBC Capital Markets analysts said in a note.

In other M&A activity, British builder Bovis Homes surged following an all-share offer from Galliford Try. Bovis jumped 10 per cent, helping Britain's mid-cap FTSE 250 index hit a new record high.

Bovis said on Sunday it had rejected an approach from Galliford Try but was still in talks about a possible deal. It said it had also rejected a proposal from Redrow.

British telecoms giant BT was a top European faller, down 3.2 per cent, giving back gains from Friday when it announced it would separate its Openreach broadband business, resolving a battle with regulators.

Specialty pharmaceutical company Indivior fell 3.2 per cent after RBC downgraded the stock to 'sector perform' from 'outperform', saying the company's shares would be dominated by litigation in 2017.

Deal-making outside Europe also spurred European stocks.

The US$15 billion Intel takeover of Israeli driverless car tech firm Mobileye drove semiconductor makers Infineon and STMicro to gain 1.1 per cent and 0.2 per cent respectively on hopes of more consolidation in the auto tech sector.

Sweden's car safety gear maker Autoliv also gained 1.6 per cent on the deal.

The Europe autos sector index was the second-highest gainer, up 1.1 per cent.