Europe Stocks Lifted by Deal Activity Inch Closer to 1-Year High

(Bloomberg) -- Deal activity sent European stocks higher for the third time in four days, in the last full trading week of 2016.

Mediaset SpA jumped 23 percent to lead gains in the Stoxx Europe 600 Index, after Vivendi SA said it plans to increase its stake in the Italian broadcaster owned by Silvio Berlusconi. Lloyds Banking Group Plc rose 2.2 percent after agreeing to buy Bank of America Corp.’s MBNA credit-card business in the U.K. for 1.9 billion pounds ($2.4 billion).

The Stoxx 600 rose 0.5 percent at the close, with the volume of shares traded about a fifth lower than the 30-day average. The benchmark is about 1.2 percent away from erasing its 2016 losses. Analysts are upbeat about profit growth at its members next year, expecting an increase of 12.5 percent.

• Investors this week are also assessing geopolitical concerns after the killing of Russia’s ambassador in Turkey on Monday and deaths of 12 people in Berlin in what German authorities are treating as a terrorist attack. Since the 9/11 attack in 2001, financial-market reactions to terror attacks have proven increasingly short-lived. 
• “While we doubt that the risk-on trend has come to an end, recent events are enough to remind people that holidays are coming, and it could be time to book some profit,” Kathleen Brooks, head of research at brokerage firm City Index in London, wrote in a note.
• While the Stoxx 600 is yet to recoup its 2016 losses, the Euro Stoxx 50 Index is up 0.4 percent for the year. The relative strength indexes of both gauges are above 70, signaling they are in overbought territory.

To contact the reporter on this story: Aleksandra Gjorgievska in London at agjorgievska@bloomberg.net. To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Namitha Jagadeesh