July 10, 2017 / 7:28 AM / a year ago

Financials get European shares off to firm start; payday for Carillion shorts

LONDON, July 10 (Reuters) - European stocks edged higher on Monday, with banks and utilities the strongest sectors, as mergers and acquisitions rumbled on with some broker notes also prompting individual stock moves.

The pan-European STOXX 600 was up 0.4 percent by 0720 GMT, rising in concert with euro zone stocks and blue-chips. Strong gains in banks boosted the benchmarks, while basic resources were weak.

Outside the main bluechips, UK midcap construction support services company Carillion grabbed traders’ attention after a profit warning and CEO exit sent its shares tumbling nearly 40 percent in heavy volumes.

Carillion shares are among the most heavily shorted across the UK market with hedge funds including Marshall Wace and Naya Capital reporting sizeable bearish bets according to FCA disclosure data.

In broader markets, Germany’s DAX rose 0.6 percent, maintaining an edge over peers after both export and import figures came in stronger than expected, with a wider increase in exports adding to the trade surplus of Europe’s biggest economy.

Shares in Norwegian conglomerate Orkla were among the strongest performers, up 2.4 percent after Norsk Hydro clinched a $3.2 billion deal to buy aluminum products maker Sapa by purchasing a 50 percent stake from Orkla.

CHR Hansen jumped 3.3 percent, benefiting from a raise to ‘buy’ from Goldman Sachs, which said the company had strong pricing power.

And German utility E.ON rose 2.5 percent, leading the buoyant utilities sector after HSBC said recent weakness offered an “excellent buying opportunity”, raising the stock to a ‘buy’ from ‘reduce’.

Spanish drugmaker Almirall also tumbled 20 percent after cutting its full-year guidance.

Reporting by Helen Reid, Editing by Vikram Subhedar

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