* FTSEurofirst 300 up 0.1 percent
* Merck gains after Pfizer deal
* H&M boosted by forecast-beating sales
* Weir hit by renewed slump in crude (Adds detail, quotes, updates prices)
By Alistair Smout
EDINBURGH, Nov 17 (Reuters) - European shares reclaimed early losses on Monday as concern over Japan’s economy after it unexpectedly slipped into recession proved short-lived.
Earnings reports, merger & acquisition news and appetite for more volatile stocks all provided support for the market.
The FTSEurofirst 300 index of top European shares edged up 0.1 percent to 1,346.64 points.
Pharmaceutical firm Merck rose 3.8 percent, the index’s top riser, after agreeing a deal with Pfizer for sharing rights to develop its experimental immunotherapy drug with the U.S. drugmaker.
Shares in Hennes & Mauritz, the world’s second-biggest fashion retailer, also rose strongly, up 2.4 percent after it posted a 14 percent rise in October sales from a year ago, beating forecasts.
Andrew Milligan, head of Global Strategy at Standard Life Investments, said that an encouraging earnings season in Europe pointed to strong economic fundamentals which should help a recovery in European equities before year-end.
“A major political shock could stop a recovery in its tracks. But the economic fundamentals are generally positive,” Milligan said, giving geopolitical tension with Russia over unrest in Ukraine as one example.
“Nobody says that Europe and Japan are going to grow strongly into 2015, but it doesn’t look like they’re on the verge of an extended slow down - rather they’ve been hit by temporary factors like Ukraine and the sales tax increase.”
Japan’s economy shrank an annualised 1.6 percent in July-September, following a 7.3 percent drop in the second quarter that was hurt by a sales tax hike hitting consumer spending.
Analysts polled by Reuters had expected 2.1 percent growth in the third quarter.
Japan’s data hit Brent crude, down more than $1 to near $78 a barrel, further pressuring shares in European oil majors and oil services groups.
Top faller was Weir Group, which dropped to a 2-1/2 year low. It was down 3.6 percent after a double-downgrade from Exane, who warn that the current oil price could trigger 25 pct reduction in rig count.
Italian banks saw strong rises, with Unicredit and Banca Monte dei Paschi di Siena both up over 2 percent.
While Monte Paschi said at the weekend no bidders had come in for the troubled lender, traders said that appetite for more volatile - or “high beta” stocks was building. (Additional reporting by Blaise Robinson)