LONDON (AP) - European shares ended higher Monday, with German stocks lifted by hopes for a new government after Chancellor Gerhard Schroeder called for early national elections.
The German DAX 30 index ended up 1.1 percent to 4,406, and the French CAC 40 index gained 0.5 percent at 4,118. In London, the benchmark FTSE 100 index added 0.4 percent to 4,989.
An early election in Germany, following the loss of a key regional vote by Schroeder's Social Democrats this weekend, would end a year of uncertainty over the future of reforms and signal the possibility of a more reform-minded government in Europe's largest economy.
Schroeder is expected to lose that election, which wouldn't likely be held until the autumn.
"Such a change in government would be good news for Germany's economic growth prospects and for further structural reforms,'' Morgan Stanley said in a note to clients.
A new government led by the Christian Democrats probably would not offer the same alternative-energy incentives as the Social Democratic Party's current coalition partners, the Greens, and would reopen the debate on nuclear power, boosting the traditional utilities sector.
German stocks were led by gains in utilities, with RWE AG up 3.1 percent and E.On AG gaining 3.9 percent, leading gainers in the DAX 30.
Solar energy company Solarworld AG ended down 13.5 percent.
Shares of British Land PLC, the U.K.'s second-largest property company by market capitalization, added 0.7 percent after it agreed to buy Pillar Property PLC for 855 pence (US$15.61; euro12.45) cash a share, or about 811 million pounds (US$1.48 billion, euro1.18 billion).
Telenor ASA shares were down 1.8 percent after the company agreed to buy two broadband suppliers, Sweden's Bredbandsbolaget for US$820 million (euro650 million) and Denmark's Cybercity for around US$240 million (euro187 million).
It sees US$390 million (euro311 million) in cost savings from the deals.
Shares of TeliaSonera AB ended down 0.8 percent, paring an earlier decline, as its bid for the Cukurova Group's stake in Turkey's largest mobile telecom, Turkcell, expired unsuccessfully. TeliaSonera said it plans to sue.
"Although legal actions could still force the deal through or Telia may raise its offer, Cukurova's comments that the government no longer accepts foreign control would, if true, be a more insurmountable obstacle,'' brokers at Dresdner Kleinwort Wasserstein said.
Carphone Warehouse PLC shares rose 2.1 percent as Deutsche Bank upgraded the British mobile phone retailer to buy from hold, saying it believes the outlook for 2005-2006 is very positive in both the company's retail and telecoms division, despite a difficult U.K. consumer environment. - AP