LONDON: Deal speculation, a strengthening dollar and weaker oil prices lifted European markets on Monday.
The German Xetra DAX 30 index gained 0.58 percent at 5,024, the French CAC 40 index rose 0.11 percent at 4,503 and the U.K. FTSE 100 index rose 0.69 percent at 5,460.
The French market's gains were limited both by weakness at oil giant Total, as crude weakened, and on declines for insurance stocks such as AXA as riots in Paris and other French cities extended into an eleventh day.
The euro fell below US$1.18 for the first time in more than 18 months, while crude-oil futures fell to around US$59 a barrel.
The weakness in the euro and oil gave a boost to automakers such as BMW and Peugeot.
Rising oil prices hurts demand for cars, and a strong dollar lifts European-based automakers' revenue.
Of other movers, Scottish Power climbed 3.3 percent on reports that E.ON may launch a bid this week for the U.K. electricity power, and that Scottish & Southern Electricity has hired Credit Suisse First Boston to advise on whether to launch a rival bid.
RWE rose 1.4 percent as the company said late Friday it's looking to sell its U.S. and U.K. water businesses. CSFB in an analyst note valued the assets at more than euro15 billion (US$17.7 billion).
Ports operator P&O added 3.1 percent as the Sunday Telegraph said it's trying to generate a bidding auction.
Potential bidders include Dubai Ports World, Temasek Holdings and Hutchison Whampoa.
VNU rose 0.4 percent after it said it may cancel its US$7 billion (euro5.8 billion ) acquisition of IMS Health amid opposition from shareholders who say they represent 48 percent of the Dutch media company's shares.
It's also discussing revising the terms of the merger agreement with IMS Health.
Still, some shareholders were looking for VNU to cancel the deal altogether.
"I think these statements weren't as firm as the market was hoping for,'' said Gert Jan Geels, a portfolio manager for Eureffect BV in Amsterdam.
Eureffect holds VNU and also is opposed to the IMS Health deal.
Ryanair Holdings PLC, Europe's largest low-cost airline, dropped over 4 percent.
It reported first-half profit rose 18 percent as traffic grew by 29 percent to 18 million passengers and average fares rose 3 percent.
The Irish carrier said it remains cautious for the rest of the financial year and sees fuel costs continuing at the current level for some time.
Ryanair sees average fares flat from last year in the third-quarter and down by 5 percent to 10 percent in the fourth quarter.
Ryanair rival easyJet declined 1.4 percent,with the U.K.-based low-cost carrier reporting a 1.4 percentage point fall in October load factor, a measure of passengers to available seats.
Dutch telecom KPN declined 1.2 percent as investors focused more on a below-forecast third-quarter revenue decline of 0.9 percent than the company lifting its 2005 earnings forecast.
KPN sees a decline of less than 5 percent for earnings before interest, taxes, depreciation and amortization after previously forecasting a mid-single-digit decline, as the company plans to spend less than previously anticipated.
Geels said with Telefonica bidding for O2, France Telecom concentrating on its debt reduction plan and Deutsche Telekom unlikely to bid due to competition concerns, private equity firms may try to take control of the company.
"You would be able to buy an enormous cash-generating machine and chop it up into a couple of pieces,'' he said. - AP