European shares hit fresh six week highs, OCI surges

Reuters , Monday 20 Jul 2015

European shares edged higher at the open on Monday, lifted by a surge in Dutch firm OCI as it confirmed that it was in merger talks.

The STOXX Europe 600 rose 0.4 percent, hitting a new six week high.

Top riser was OCI, up 11 percent after the Amsterdam-listed chemical company confirmed it is in advanced merger talks with U.S. fertiliser maker CF Industries Holdings Inc.

Norwegian peer Yara International rose 2.8 percent, a top FTSEurofirst 300 riser. Yara sold a 50 percent stake in its British fertiliser manufacturer to CF Industries, its joint venture partner, three weeks ago and traders said there could be further M&A activity in the sector.

"CF held talks with Yara last year... and we still see the potential for continual activity in this space," said Atif Latif, director of trading at Guardian Stockbrokers.

The biggest faller on the FTSEurofirst 300 was Julius Baer , down 2.6 percent after first-half net profit slid.

The Swiss asset manager took a $350 million charge towards an expected settlement in a U.S. criminal investigation into how the Swiss bank helped wealthy Americans dodge taxes.

Precious metal miners also came under pressure, with Fresnillo down 2.3 percent after gold hit a 5 year low.

The pan-European FTSEurofirst 300 was up 0.4 percent, hitting its highest level since May 29.

The market has rallied in recent weeks as Greece struck a deal with its international lenders to avert bankruptcy.

Greek banks were reopening their branches across the country on Monday after a three-week shutdown, officials said, although the Athens Stock Exchange remained closed.

German Chancellor Angela Merkel called for swift aid talks so Athens could also lift withdrawal limits, adding it would be possible to talk about changing the maturities of Greece's debt or reducing the interest Athens has to pay after the first successful review of the new bailout package.

Euro zone banks rose 0.8 percent, a top sectoral gainer.

However, traders said that while the market was still being supported by progress in reach an agreement over Greece, the market might pause after the recent rally, exposing "long" bets on a rising market to future falls.

"The general market is still reacting positively to the Greek news," Guardian's Latif said.

"Given the rally we have seen in the broader European market we see this an opportune time to trim longs and add some downside protection."

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