LONDON (CNNfn) - Europe's largest markets were firmer Monday morning as takeover talk and a fifth straight record-close for the Dow Jones industrial average injected early confidence into bourses.
Taking its cue from a strong showing in Asia's smaller markets and the Dow's continuing run-up, London's FTSE 100 index traded up 0.36 percent at 6,444.0. The rise came amid speculation the index could once again test record peaks Monday. The focus was on big banking stocks as investors homed in on merger speculation.
On Friday, the Dow industrials notched up 31 points to close at 10,493, more than 320 points, or 3 percent, higher on the week.
Frankfurt's electronically-traded Xetra Dax rose 1.43 percent to 5,216.52. In Zurich, the SMI was up 0.64 percent, at 7,210.5. The Paris-based CAC 40 rose just under 1 percent to 4,344.59, on the heels of cautious trading last week.
The strong performance on Wall Street is expected to buoy confidence in Europe this session at a time when corporate activity from the telecom to banking to pharmaceutical sector is likely to keep traders on their toes.
The main focus Monday will be on the telecom sector after Deutsche Telekom (FDTE) admitted over the weekend it was holding alliance talks with Telecom Italia, without giving further details. Deutsche Telekom's stock was up about 3 percent at 39.30 euros in Frankfurt. In Milan Telecom Italia shares were suspended for the session.
In Paris, confirmation of the talks pressured shares of France Telecom (PFTE) as investors displayed apprehension that the French telecom powerhouse could be left out in any merger deal. France Telecom slipped 2.4 percent to 78.95 euros.
Other stocks to watch include German department store group Karstadt (FKAR), which announced it is to merge with catalog retailer Quelle. The company has given out few details of the deal - Karstadt's stock was up 31 euros at 405 in Frankfurt.
In London, the focus will again fall on supermarket chain Asda (ASSD) and its suitor Kingfisher (KGF). The two sides were due Monday to give more details on their $10 billion deal amid rumors that other bidders for Asda could yet emerge. The merger is expected to trigger a major shake-out in the U.K. retail sector.
Kingfisher was off 0.18 percent at 840 pence in London; Asda shares spurted 2.64 percent to 204 pence.
There is also speculation linking Royal Bank of Scotland (RBOS) with a takeover bid for Barclays (BARC) after the latter was thrown into turmoil last week following the loss of its newly appointed chief executive. Barclays was up nearly 2 percent at 1,934 pence, while Royal Bank of Scotland edged up half a percentage point to 1,465 pence.
The flurry of merger speculation gave a boost to bank Lloyds TSB (LLOY) and the U.K.'s largest insurer, Prudential (PRU), which rose 1.3 percent and 2.2 percent respectively in London.
In Paris, French luxury goods group LVMH (PMC) shot up more than 4.6 percent, to 225 euros, after the company reported a 12.8 percent rise in first-quarter sales and said it was able to confirm its full-year growth target outlook.
After opening slightly higher, Madrid shares slipped nearly half a percentage point Monday morning as the newly-formed Banco Santander Central Hispano debuted on the blue-chip Ibex 35 index. Telecom operator Telefonica was up 0.6 percent.
-- from staff and wire reports