LONDON: European shares advanced in thin trade on Monday, boosted by better-than-expected German manufacturing data and merger and acquisition speculation about chemicals companies.
Trading volume was lighter than usual on most indexes because of a public holiday in Britain, home to Europe's largest stock market and many large trading firms.
Germany's Dax, up 1.4 percent at 11,619 points, outperformed its main peers after an index of manufacturing activity was revised up in its final April reading, suggesting activity remained healthy despite a slowdown from the previous month.
"The German economic growth has been solid and gives support to the stock market," said Christian Stocker, a strategist at UniCredit. "I think the majority of analysts will be revising their 2015-16 earnings forecasts higher during the next six months."
Christian Henke, a strategist with IG, said the German data could set off a rebound in the DAX after its recent 7 percent fall, provided that the index closes above 11,400 points, roughly corresponding to the 23.6 percent retracement of its October-April rally.
Euro zone manufacturing growth also eased in April, but factories raised prices for the first time in eight months, according to a survey that also showed headcount rose at the fastest pace in nearly four years.
The Euro STOXX index of euro zone shares closed up 0.7 percent at 374.17, recouping part of a 2.7 percent fall in the previous week, when weak U.S. economic data rattled investors.
Indexes in Nordic countries and Switzerland were up between 0.2 percent and 1.3 percent. They were reopening after a three-day weekend.
Switzerland's Syngenta jumped 8.1 percent after Bloomberg reported late on Thursday that Monsanto, the world's largest seed company, had again made an offer to buy the largest maker of crop chemicals.
The broader chemical sector was up 1.4 percent, the best-performing sector.
Portugal's biggest-listed bank Millennium bcp rose 4.3 percent in robust volume before reporting its first quarter results. The numbers, published after the close, showed a bigger-than-expected rise in net profit.
Investors' focus later this week is likely to be on Britain's national election on Thursday. The latest polls show neither of the major parties is likely to win a clear majority of seats.
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