European shares rise on recovery hopes, Bayer jumps

European shares rose in thin trading on Monday, as optimism over reopening of countries and signs of more stimulus for the coronavirus-hit eurozone economy helped sentiment.

The eurozone stock index rose 0.9 percent, with the pan-European STOXX 600 up 0.6 percent and Germany's DAX up 1.2 percent.

Germany's Bayer AG provided the biggest boost, gaining 6.3 percent, after saying it had made progress in seeking a settlement over claims its Roundup weedkiller causes cancer.

French multimedia conglomerate Lagardere SCA surged 9.6 percent after Bernard Arnault, the billionaire behind luxury fashion group LVMH, agreed to buy a stake in the holding company of fellow billionaire Arnaud Lagardere.

Trading volumes were lower across the board with the US, UK and some countries in Asia closed for holidays.

Despite growing US-China tensions stalling recovery for equities in May, investors focused on the positives amid signs that many European economies were coming back to life.

French authorities reported the smallest daily rise in new coronavirus cases and deaths on Sunday, while Spain is set to reopen international tourism from July, Prime Minister Pedro Sanchez said over the weekend.

Ifo Institute's survey for May showed German business morale rebounded after a dramatic fall in the previous month, and an economist said Europe's largest economy is beginning to see light at the end of the tunnel.

"The main theme in the market is that the global economy is steadily reopening like floodgates slowly lifting," Sebastien Galy, macro strategist at Nordea Asset Management said.

Hopes of more stimulus are also running high after minutes of the European Central Bank's latest policy meeting suggested it was ready to expand its Pandemic Emergency Purchase Scheme as early as June if economic data warrant such a move.

All eyes will turn to the European Commission's recovery plan on Wednesday after EU member states Austria, Sweden, Denmark and the Netherlands stated their opposition to a French-German plan for a 500-billion euros coronavirus recovery fund.

Among other individual movers, Lufthansa, in talks with the German government over a 9-billion euros bailout, rose 1.8 percent after a company spokeswoman said it would resume flights to 20 destinations from mid-June.

Travel group TUI AG jumped 10.6 percent on plans to resume flights to main holiday destinations in Europe by the end of June, its chief executive officer told a German newspaper. 

Asia shares

The mood was upbeat, also, in Asia, where Japan’s benchmark Nikkei 225 added 1.7 percent to finish at 20,741.65 ahead of Prime Minister Shinzo Abe's announcement that the state of emergency that still was in effect for Tokyo and several other areas was ending as outbreaks appeared to be subsiding.

“We have drawn the attention of the world,” Abe said. “We will take a strong step forward.”

Elsewhere in Asia, South Korea’s Kospi gained 1.2 percent to 1,994.60 and Australia’s S&P/ASX 200 jumped 2.2 percent to 5,615.60.

Shares in Hong Kong fell initially after police used tear gas to quell weekend protests over a proposed national security bill for the former British colony. By the end of the day, but recouped earlier losses to be little changed. Hong Kong’s Hang Seng inched up less than 0.1 percent to 22,952.24. The Shanghai Composite picked up 0.2 percent to 2,817.97.

The protests in Hong Kong in response to legislation presented to China's National People's Congress, which is now meeting in Beijing, were the largest in months despite bans on large gathering meant to prevent spreading the coronavirus.

The revival of sometimes violent pro-democracy protests that rocked the city for much of 2019 raises the likelihood of more tensions between Beijing and Washington over China's efforts to exert more control over the semi-autonomous territory.

“With more riots in the street amid the knockdown effects of Covid-19 and a possible exodus of jobs from the city's financial center, surely things will get much worse before better," Stephen Innes of AxiCorp said in a commentary.