STOXX 600 ends at record high; BBVA weighs on Spain

Europe's benchmark index inched up to close at a record high on Thursday, driven by a jump in industrial stocks, while shares of Spanish bank BBVA hit a two-month low after announcing a hostile takeover bid for smaller rival Sabadell. The pan-European STOXX 600 shrugged off earlier losses and ended 0.2% higher, with Germany's DAX up nearly 1%.

Europe's benchmark index inched up to close at a record high on Thursday, driven by a jump in industrial stocks, while shares of Spanish bank BBVA hit a two-month low after announcing a hostile takeover bid for smaller rival Sabadell.

The pan-European STOXX 600 shrugged off earlier losses and ended 0.2% higher, with Germany's DAX up nearly 1%. Industrial stocks like Siemens, ABB and Schneider Electric added over 1% each and were top boosts on the benchmark index.

Europe's STOXX 600 kick-started May on a positive note, after taking a breather from the record-breaking rally in April, owing to resilient earnings, the European Central Bank's indication of a likely June rate cut and ebbing Middle East tensions. "The idea of the ECB moving to cut interest rates soon in June and potentially start a rate cutting cycle has been the biggest driver," said Fiona Cincotta, senior market analyst at City Index.

As for major M&A developments, Spanish bank Sabadell jumped 3.1% after rival BBVA presented a 12.23 billion euro takeover bid directly to shareholders, even though the former's board already rejected the proposal. With BBVA shares down 6.7%, Spain's benchmark index lost nearly 1% to lag its regional peers.

"It is quite rare to see this type of hostile takeover bid in Europe, and it has caught the market a little bit by surprise," Cincotta added. Automobiles dropped for the second straight day by 0.8%, with Mercedes-Benz off 5.8% as the German automaker's stock traded ex-dividend.

Top executives at BMW and Volkswagen have warned against imposing EU import duties on electric vehicles from Chinese automakers, saying it could upend the bloc's Green Deal plan and harm China-manufactured car-importing automakers. Other key stocks that were trading ex-dividend and weighing on the STOXX 600 were HSBC and German financial services firm Allianz SE, down 1.8% and 3.7%, respectively.

On the earnings front, Belgian drug developer Argenx lost 5% following its first-quarter earnings. Italian payments group Nexi jumped nearly 6.4% after a larger-than-forecast rise in first-quarter core profit.

BE Semiconductor Industries climbed 3.6% after announcing it received order for 26 hybrid bonding systems. BFF Bank's shares dropped 10.3% before being halted after the Italian lender said it had been instructed by the Bank of Italy to suspend dividend and bonus payments due to issues about the way it was classifying credits towards the state.

At least 61% of the STOXX 600 companies that reported their first-quarter earnings have exceeded estimates, versus the typical 54% beat rate, according to LSEG data on Tuesday.

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