Europe close: Periphery stocks outperform amid sovereign debt upgrades
Periphery stocks outperformed on Monday, following sovereign debt upgrades for Greece and Spain, amid news that delegates from Germany's SPD party voted to start formal talks with the CDU/CSU on creating a grand coalition in the country.
By the close of trading, the Athens Stock Exchange's general index was up by 1.25% to 858.12, together with a 1.0% advance for Spain's Ibex 35 to 10,584.0.
After the close of markets on Friday, Standard&Poor's raised its rating on Greece's long-term sovereign debt to B with a positive outlook.
The announcement came ahead of a regularly-scheduled meeting of euro-area finance ministers, on Monday, at which they were expected to assess Greece's compliance with the terms of its bailout package. A positive assessment might see the so-called Eurogroup sign off on about €6.7bn of new loans to Athens.
Spanish assets also got a boost after Fitch Ratings raised its view on that country's sovereign debt by one notch to A-, with a stable outlook.
In parallel, the benchmark Stoxx 600 added 0.31% or 1.23 points to 402.11, alongside an advance of 0.22% or 29.24 points to 13,463.69 for the German Dax, while the Cac-40 was 0.28% or 15.48 points higher at 5,541.99.
Meanwhile, in Germany, at the weekend SPD delegates voted to begin formal negotiations with their main political rivals from the CDU/CSU.
However, any deal would yet need to be put to a vote before all of the party's members before it could be implemented. Hence, there was still a risk that new elections would be called.
"The political mood in Germany is improving as the SPD has agreed to enter into formal negations with the CDU. These talks are no guarantee that a coalition government will be formed, but traders are viewing the news as positive.
"The DAX isn't too far away from its all-time highs, and if the talks go well, we could see it test record levels," said David Madden at CMC Capital Markets.
No major economic reports were scheduled for release on Monday in Europe or the US.
In corporate news, French drug-maker Sanofi offered $11.6bn on Friday evening for US rival Bioverativ, sending its shares sharply lower.
Deutsche Telekom's finance chief told Boersen Zeitung the company would keep its promise to raise dividends in 2018 and thereafter.
Further south, Atlantia and Hochtief continued to manoeuvre to gain the upper hand in their ongoing battle to take control of Spanish toll-road operator Abertis.
On Friday, Atlantia said it would call a shareholder meeting to vote on changes to its bid for Abertis.
According to Bloomberg, Airbus was negotiating with British Airways over the possible sale of new A380 jets.
In notable broker recommendations, analysts at Credit Suisse cut their earnings per share estimates for Spanish lender BBVA in 2018 and 2019 by 7% and 10%, respectively, but upped their target price on its stock from €6.7 to €7.5.