European shares edged up in holiday-thinned trading on Monday, with Swiss drugmaker Roche rising on regulatory approval for certain COVID-19 products, although concerns around rising Omicron infections capped gains.
The pan-European STOXX 600 rose 0.2% following a mixed session for Asian shares.
Defensive sectors including healthcare and real estate gained the most, while oil stocks led losses as crude prices declined. Britain, Australia and Hong Kong markets were closed for holidays, while Wall Street was set to resume trading after a holiday on Friday.
Following a 4% drop in 2020, the STOXX 600 is on course for a 21% jump this year after encouraging study results on the Omicron variant drove gains last week.
"Last week set the stage for the so-called 'Santa Rally' this week, as low volume and no new surprising headlines usually allow asset prices to follow the prevailing path of least resistance," said Charalambos Pissouros, head of research at JFD Group.
Still, the high transmissibility of the new variant remains a concern, with rising cases worldwide threatening the economic recovery from the pandemic.
France hit another COVID-19 infection record on Friday, while airlines around the world cancelled more than 4,500 flights over the weekend and China reported its highest daily rise in local infections in 21 months.
"Most nations may prefer not to tighten restrictions further this week in order not to spoil the holidays, but this could be the case early next year.
With that in mind, and as central banks do not have the luxury to add more stimulus into the market due to overheating inflation, we cannot rule out more setbacks after the turn of the year," Pissouros said.
Among individual stocks, high-tech industrial group Groupe Gorgé jumped 12.8% after confirming an indicative offer for its acquisition of iXblue.
Roche added 0.8% after Swiss drugs regulator Swissmedic approved Ronapreve, an antibody treatment jointly developed by the drugmaker and Regeneron to treat COVID-19 patients.
On Friday, the US Food and Drug Administration granted emergency use authorization to Roche's COVID-19 at-home rapid test that can be used by people as young as 14.
CNH Industrial extended a three-day rally, adding 2.5% to hit a record high after on Thursday approving the spin-off of its truck-making business, Iveco Group.