European shares rise on banking boost

European shares rose on Monday, led by banks as dealmaking involving Credit Agricole and ‌Banco BPM and strong results from Italy's UniCredit lifted the sector. The pan-European STOXX 600 rose 0.5% to 651.38 points by 0926 GMT, while the Euro STOXX banking index gained 1.6%.

Banco BPM jumped 10% after Credit Agricole SA said it has proposed that its Italian subsidiary ‌merge with the Italian lender to create a combined entity that would become the country's third-largest bank. The French bank's shares ‌dropped 1%. UniCredit gained 5.2% after posting a much larger-than-forecast 24% annual rise in third-quarter earnings and hiked its full-year profit goal, as it prepares to shape strategy at Commerzbank. The German lender was up 2.8%.

"European banks have benefited in the early quarters of this year from the AI expansion. The AI productivity ⁠gains have ​been quite strong, but the financing ⁠also helped keep the bank earnings quite strongly along with higher trading revenues," said Ipek Ozkardeskaya, a senior market analyst at Swissquote Bank. Rate expectations will come into ⁠focus later this week with October inflation data and third-quarter eurozone growth figures.

Investors see the European Central Bank hiking interest rates by at least ​25 basis points in February next year, LSEG-compiled data showed. Markets were also awaiting details on who could replace Christine ⁠Lagarde as the next President of the central bank. Offering some relief, Brent crude fell 2% after US President Donald Trump downplayed the likelihood of new strikes on ⁠Iran ​as long as talks to end the conflict progressed.

Technology stocks such as Aixtron and ASML swung between small gains and losses following sharp declines the week before on concerns about the outlook for the global AI trade after the Democrats won ⁠the US Congress. SAP rose 2% after J.P. Morgan upgraded the German software group to "overweight" from "neutral".

Hochtief fell 4.1% after majority shareholder ⁠ACS said it had not considered ⁠launching a takeover bid for the German construction group. Luxury stocks such as LMVH and Christian Dior lost over 2% each. Data showed that consumer demand in China, a key importer of European ‌luxury products, was ‌weak in October.