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Europe: Shares rise to 13-month high on miners strength, M&A news

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[LONDON] European shares gained on Monday as mining stocks touched a 2-1/2-year high on rising copper prices and mergers and acquisitions continued to drive shares, with takeover offers sending German drugmaker Stada to a record high.

The pan-European Stoxx 600 index rose 0.8 per cent, after earlier touching its highest level since Dec 2015.

The basic resources index was up 2.7 per cent. It led sectoral gainers in Europe as copper prices hit their highest in 20 months in heavy trade, driven up by supply worries after shipments were shut off from the world's two biggest copper mines.

More than 300 people wearing hoods vandalised property at the world's largest copper mine at the weekend and forced contract workers to stop work during a strike at BHP Billiton's Escondida in Chile.

"This strike is unlikely to be resolved quickly," analysts at Jefferies said in a note.

Steel and mining company ArcelorMittal was a top gainer, up 4.9 per cent and top of the CAC 40, with heavyweight Anglo American not far behind.

Elsewhere merger and acquisition news once again drove activity, after German drugmaker Stada said it had received two offers for the acquisition of the company, one of which is private equity group Cinven Partners LLP.

Stada rose 14 per cent before paring back to close up 12.8 per cent, leading gainers on the Stoxx 600 index and finishing the day at just over the 56 euros per share offered by Cinven.

"Disposal of the company now looks almost certain," Natixis analyst Philippe Lanone wrote in a note, adding that the price offered by Cinven could be overshot.

Italy's newly merged Banco BPM was the second-top European riser after its results, up 6.7 per cent. Peer Ubi Banca gained 6.4 per cent.

"The results season just finished showed that the improvement in asset quality is becoming more of a reality, but the hope of improving profitability is still not fulfilled and is postponed to 2017," a Citi note on Italian banks said.

Concern over an upcoming French election seemed far from equity markets, as the CAC 40 outperformed European peers to close up 1.2 per cent.

Renault benefited from an upgrade from top-rated Jefferies analyst, up 4.4 per cent, and peer Peugeot gained 3.1 per cent, while French mid-cap auto parts company Faurecia gained 3.9 per cent.

Top loser in Europe was Swedish defence firm Saab AB. Its shares fell 3.1 per cent after its quarterly operating profit and its dividend proposal fell short of expectations.


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