European shares higher on possible Fiat-Renault merger, EU vote in focus


FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, May 24, 2019. REUTERS/Staff

(Reuters) – European shares rose on Monday as a possible Fiat Chrysler-Renault merger thrust auto stocks higher, while investors assessed the results of the EU parliament elections where pro-European parties are expected to hold on to two-thirds of seats.

The pan-European STOXX 600 was up 0.5% by 0715 GMT with most indices inching higher but trading volumes were thin with UK, US markets closed for market holidays.

The auto sector rose 2.5%, outperforming all other sectors, as Italian-American carmaker Fiat Chrysler confirmed it made a “transformative merger” proposal to French peer Renault in a deal which would create the world’s third-biggest carmaker and help address some of the weaknesses in both companies.

The proposed deal would be structured as a 50-50 ownership through a Dutch holding company. Shares of both companies were at top of the STOXX 600, up more than 15% each.

Meanwhile, shares of German car maker Volkswagen rose 2% after a German paper reported its intention to jointly build up battery cell production in Salzgitter with Swedish startup Northvolt.

In a rather quiet day for company news investors focused on the European Parliamentary elections where parties committed to strengthening the European Union held on to two-thirds of seats although far-right and nationalist opponents also saw strong gains.

The two-party “grand coalition” of the conservative European People’s Party (EPP) and the Socialists (S&D) losing their combined majority amid an increase in support for liberals, the Greens and nationalists means policymaking in the EU may become more complex.

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In Asia, stocks inched up but remained near four-month lows on Monday amid concerns about U.S.-China tensions with U.S. President Donald Trump saying he was ‘not yet ready’ to make a deal with China.

The trade war escalation this month has hit the pan-European STOXX 600 which is looking at its first monthly decline for 2019 since a sell-off at the end of last year that knocked 15% off the index.

Reporting by Agamoni Ghosh; Editing by Toby Chopra



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