LONDON: European shares hit a two-month high in holiday-thinned trade on Monday on optimism the earnings season will stay strong in the near-term and in a knee-jerk reaction to news al Qaeda leader Osama bin Laden was killed.
Bin Laden's death in a shootout with US forces in Pakistan on Sunday ended a nearly 10-year worldwide hunt for the mastermind of the Sept. 11 attacks and prompted equity investors to believe global risk threats might reduce.
Although analysts said that the positive impact of the news might be short-lived and focus will soon shift back to economic fundamentals and company earnings.
At 0735 GMT, the FTSEurofirst 300 index of top European shares was up 0.3 percent at 1,160.03 points after touching 1,162.05, the highest since early March. The Euro STOXX 50 -- an index of the euro zone's top blue chips -- was up 0.3 percent at 3,021.50 points.
The UK stock market was closed for a holiday.
"It's a psychological and knee-jerk reaction and we have to see how long it lasts," said Koen De Leus, strategist at KBC Securities, referring to the news of bin Laden's death.
"The market is also getting support from earnings, which are good. We have some important economic figures this week that might set the near-term direction."
Investors awaited the release of the US Institute for Supply Management's manufacturing index at 1400 GMT, US jobless claims figures on Thursday and non-farm payrolls numbers on Friday.
Across Europe, France's CAC 40 gained 0.5 percent, while Germany's DAX rose 0.9 percent to its highest level in more than three years.
"Last week and this week taken together, more than two thirds of the DAX companies will report. In these two weeks, the chances for a test of the equity market's leeway on the upside will be better than in the weeks to come," said Tammo Greetfeld, equity strategist at UniCredit in Munich.
"Going forward, the newsflow is unlikely to live to high expectations given a number of burdening factors that have accumulated," he said, referring to factors such as a rise in oil prices, more and more central banks raising interest rates, cyclical indicators which are past their peak, the catastrophe in Japan and the euro zone debt crisis.
Among individual movers, Demag Cranes surged 22 percent after US crane maker Terex said it would launch a takeover offer for its German rival in an 884 million euro ($1.31 billion) bid.
Danish food ingredients and enzymes maker Danisco gained 4.3 percent after its board of directors unanimously recommended that Danisco shareholders accept DuPont's improved offer for Danisco.
On the downside, Actelion fell 5 percent after the company said it may appeal against a jury's decision in a Californian court to award Asahi Kasei Pharma Corporation up to $547 million in a dispute with Actelion unit CoTherix.
TNT was down 3.8 percent after reporting a worse than expected performance in its mail unit, adding to woes in its global express division.
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