Financials get European shares off to firm start; payday for Carillion shorts

LONDON, July 10 (Reuters) – European stocks edged higher on
Monday, with banks and utilities the strongest sectors, as
mergers and acquisitions rumbled on with some broker notes also
prompting individual stock moves.

The pan-European STOXX 600 was up 0.4 percent by
0720 GMT, rising in concert with euro zone stocks and
blue-chips. Strong gains in banks boosted
the benchmarks, while basic resources were weak.

Outside the main bluechips, UK midcap construction support
services company Carillion grabbed traders’ attention
after a profit warning and CEO exit sent its shares tumbling
nearly 40 percent in heavy volumes.

Carillion shares are among the most heavily shorted across
the UK market with hedge funds including Marshall Wace and Naya
Capital reporting sizeable bearish bets according to FCA
disclosure data.

In broader markets, Germany’s DAX rose 0.6 percent,
maintaining an edge over peers after both export and import
figures came in stronger than expected, with a wider increase in
exports adding to the trade surplus of Europe’s biggest economy.

Shares in Norwegian conglomerate Orkla were among
the strongest performers, up 2.4 percent after Norsk Hydro
clinched a $3.2 billion deal to buy aluminum products
maker Sapa by purchasing a 50 percent stake from Orkla.

CHR Hansen jumped 3.3 percent, benefiting from a
raise to ‘buy’ from Goldman Sachs, which said the company had
strong pricing power.

And German utility E.ON rose 2.5 percent, leading
the buoyant utilities sector after HSBC said recent
weakness offered an “excellent buying opportunity”, raising the
stock to a ‘buy’ from ‘reduce’.

Spanish drugmaker Almirall also tumbled 20 percent
after cutting its full-year guidance.

(Reporting by Helen Reid, Editing by Vikram Subhedar)

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