Corporate deal hopes lift European markets despite Greek budget concerns; Wall Street closed

European markets lifted by corporate deal hopes

LONDON — European stock markets rose Monday as speculation of a pickup in corporate dealmaking helped offset earlier losses in Asia and concerns about Greece’s budget problems.

Wall Street was to remain closed for the Martin Luther King public holiday.

The FTSE 100 index of leading British shares was up 40.37 points, or 0.7 percent, at 5,495.75, with shares in International Power PLC leading the advance — up 5 percent — following weekend speculation that GDF Suez is preparing a bid for the company.

GDF shares in France were up 2 percent, helping the CAC-40 rise 24.47 points, or 0.6 percent, to 3,978.85, while Germany’s DAX was 32.22 points, or 0.6 percent, higher at 5,908.19.

Shares in candy maker Cadbury PLC in London were also marked up over 1 percent in London on weekend newspaper reports that Kraft Foods Inc. was preparing to sweeten its offer for the British company.

Analysts said there are mounting expectations that the amount of mergers and acquisitions taking place will increase over the coming months as the global economy recovers from recession. One corollary of increased confidence is an increase in mergers and acquisitions.

Companies considering doing deals won’t want to leave it until too late if they think that the ten-month bull run in equity markets will continue as the recovery becomes entrenched.

“As equity prices continue to move higher the opportunities to make smart acquisitions could become more limited, so a flurry of M&A activity could well be expected in the coming months,” said Anthony Grech, market strategist at IG Index.

With Wall Street closed later to commemorate the life of the civil rights leader and economic news limited, investors think the rest of the session will prove to be lackluster.

When Wall Street returns on Tuesday, the focus will turn towards the next batch of fourth quarter corporate earnings figures, including those from Citigroup Inc. and IBM Corp.

So far, earnings have been fairly mixed, with upside surprises from the likes of Intel Corp. offset by disappointments elsewhere, most notably Alcoa Inc.

On Friday, U.S. stocks fell by 1 percent, even though JP Morgan Chase & Co. kicked off the banks’ reporting season with solid earnings, as investors worried about ongoing consumer loan losses at the bank.

A meeting of the 16 finance ministers of the countries that use the euro in Brussels later — after stock markets have closed in Europe — will be closely monitored in the currency markets though.

The main topic of debate will be the shaky state of Greece’s public finances and the measures planned by the new Socialist government to rein in borrowing over the coming years.

Concern about Greece’s debts has been one of the reasons why the euro has floundered over the last month or so from 16-month highs above $1.50.

“With rising concerns about the workability of the Greek government’s stability and growth plan, the firm rejection from within the eurozone of the idea of a bailout, the rapidly rising cost of default insurance on Greek sovereign debt and concerns over deficits elsewhere in the region, the problems for the single currency are mounting rapidly,” said Neil Mellor, a currency strategist at Bank of New York Mellon.

“Given that these come at a time when the euro is trading significantly above its long term averages against a wide range of currencies — 23 percent against the dollar — after years of being used as the prime vehicle for reserve diversification, there is plenty of space for it to fall,” he added.

Ahead of the ministers’ meeting, the euro was up 0.2 percent at $1.4370, while the dollar was down 0.1 percent at 90.67 yen.

Earlier in Asia, Japan’s Nikkei 225 stock average ended 127.02 points, or 1.2 percent, lower at 10,855.08 while Hong Kong’s Hang Seng fell 194.15 points, or 0.9 percent, to 21,460.01. Markets in Singapore and Taiwan also lost ground.

Other markets fared better, with South Korea’s Kospi gaining 0.6 percent to 1,711.78 and Australia’s stock measure adding 0.2 percent and Shanghai’s index rising 0.4 percent.

Oil prices rose modestly, with benchmark crude for February delivery up 38 cents at $78.38. On Friday, the contract slid $1.39 to settle at $78. The price was down $4.75 for the week after declining for five straight days.

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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.