LONDON (Dow Jones)--European stock markets ended higher Monday, led by banks amid hopes for an agreement on a long-delayed Greek bailout, while resource stocks were boosted by China's decision over the weekend to ease reserve requirements for the country's banks.
The Stoxx Europe 600 index closed 0.8% higher at 268.16, its highest finish since July, extending gains into a fourth consecutive day. U.S. stock markets were closed in observation of the Presidents Day holiday.
The biggest gainer in the index, TNT Express NV, surged 60.5% to 10.18 euros after the firm rejected a EUR4.9 billion takeover bid worth EUR9 a share from United Parcel Service Inc. last Friday.
Bloomberg News reported that TNT wants a higher offer, but TNT declined Monday to comment. Credit Suisse upgraded the stock to neutral from underperform after the bid. PostNL NV, which holds a 29.9 stake in TNT, rallied almost 50%.
Banks jumped on Monday, with gains fuelled by optimism that euro-zone finance ministers will approve a EUR130 billion bailout package for Greece and clear the way for a debt-swap deal with private creditors at a meeting in Brussels in the afternoon.
"We expect a deal to be done, however, we do not anticipate it being sufficient to prevent Greece from coming back to the table again in roughly five to six months' time," said Stephen Pope, managing partner at Spotlight Ideas, in a note. "The nation is in the fifth straight year of economic contraction and without growth it is almost impossible to see whatever funds are lent now or in the future being serviced properly or repaid."
The Athens General Index rose 0.2% to 825.75, with shares of National Bank of Greece SA up 0.7%.
Banks led gains across Europe. Banca Popolare di Milano SCARL jumped 8.2% and BBVA SA added 2.9% after being upgraded to outperform from neutral by Credit Suisse.
In Paris, Credit Agricole SA advanced 2.5%, BNP Paribas SA gained 0.8% and Societe Generale SA climbed 0.6%.
The French CAC 40 index added 1% to 3,472.54.
Oil firms also boosted the markets Monday and BP PLC and BG Group PLC rose by 2.1% and 1.8% respectively in London.
Oil futures for March delivery rose above $105 a barrel in electronic trade on Monday, surpassing a nine-month high of more than $103 reached in New York on Friday. Oil has been gaining on geopolitical concerns and optimism about Greece. On Sunday, Iran said it had halted crude exports to France and Britain.
Resource stocks also rose after the People's Bank of China Saturday cut the reserve requirement ratio for banks by half a percentage point to spur lending. The country is a big user of natural resources, and attempts to stimulate growth can mean increased demand for commodities.
The U.K. FTSE 100 index ended 0.7% higher at 5,945.25, boosted by miners. Antofagasta PLC added 2.2%, BHP Billiton PLC rose 2.7%, Rio Tinto PLC increased 2.3% and Polymetal International PLC was up 1.4%.
German banks Commerzbank AG and Deutsche Bank AG rose 3.2% and 2.2% respectively, lifting the DAX 30 index 1.5% to 6,948.25.
BASF SE further supported the index and gained 2.7% ahead of the chemicals company reporting 2011 results on Friday.
The German index has rallied the most among the major country-specific indexes since New Year's and is up 17.8% year-to-date. J.P. Morgan Cazenove said Monday that the DAX remains its preferred pick at a country level as it is one of the most attractive indexes relative to bonds.
"It is beneficiary of a rebound in cyclicals, which we do not think is finished yet," J.P. Morgan Cazenove analysts said in a note.
Within the index, the analysts highlighted HeidelbergCement AG, up 2.5% Monday, Infineon Technologies AG up 3.2%, Volkswagen AG, which rose 0.6%, and Bayer AG, which added 2%.
Among other notable gainers, STMicroelectronics NV jumped 7.7%. The chip maker said Monday it appointed Chief Financial Officer Carlo Ferro to chief operating officer at ST-Ericsson, where he will focus on the turnaround of the joint venture. Shares of LM Ericsson Telephone Co. added 1.1% in Stockholm.
Clariant AG rose 3.7% after Citigroup upgraded the stock to buy from neutral on the back of "two quarters of solid results, which have beaten expectations."
Among biggest decliners in Europe, Veolia Environnement SA shed 3.1%. French President Nicolas Sarkozy on Monday said reports that he was pushing for the removal of Veolia Chief Executive Antoine Frerot were "absurd," Dow Jones Newswires reported.
Aveva Group PLC lost 1.1% after UBS downgraded the stock to sell from neutral, citing that the software firm is unlikely to provide "enough upside surprises to sustain momentum" in 2012.
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