LONDON (Reuters) - European shares bounced back from one-month lows on Monday as more merger and acquisition news improved sentiment and miners rose on hopes a planned mining tax in Australia could be scrapped once a government is formed there.
At 1042 GMT, the FTSEurofirst 300 index of top European shares was up 0.9 percent at 1,038.53 points after hitting a one-month closing low in the previous session on concerns about global economic growth.
Miners featured among the top gainers as investors expected that weekend elections in Australia, the world's leading metals producer, would deliver a new minority conservative government that will scrap a planned mining tax.
"The elections results that we have been seeing will suggest that perhaps there could be some further movement in relation to softening of that position," said Henk Potts, equity strategist at Barclays Wealth, referring to the proposed mining tax.
The STOXX Europe basic resources index rose 1.7 percent, while BHP Billiton, Anglo American, Antofagasta and Rio Tinto were up 1.6 to 2.2 percent.
Equities got support from merger and acquisition (M&A) news, with Foster Group jumping more than 7 percent after sources said beverage giants SABMiller and Asahi Breweries were looking at Foster's beer operations, valued at more than $10 billion.
"M&A activities are certainly a key driver for markets. Equity valuations, rehabilitating credit markets and an economic recovery mean conditions are ripe for mergers and acquisitions."
In another M&A news, HSBC will buy up to 70 percent of South Africa's Nedbank, in a potential $6.8 billion deal that would give Europe's largest lender a bigger presence in Africa's top economy and a gateway to the fast-growing continent. Old Mutual, which has a controlling stake in Nedbank, surged 4.3 percent.
"From a strategic point of view, we believe the deal would be positive for HSBC, providing it with exposure to fast growing economic region and allowing the enlarged Group to lever the burgeoning Asia-Africa trade corridor," said Danny Clarke, an analyst at Shore Capital.
Global M&A offers worth about $200 billion were in the news in August alone, Thomson Reuters data showed. They included BHP Billiton's $39 billion hostile offer for Potash Corporation of Saskatchewan Inc and RSA Insurance's 5 billion pound offer to buy rival Aviva's non-life units, which Aviva has rejected.
FINANCIALS ADVANCE
Financial stocks were among the top gainers, with STOXX Europe 600 banking index rising 1.5 percent. HSBC was up 0.8 percent, while Standard Chartered, Royal Bank of Scotland and Natixis rose 1.2 to 3.3 percent.
The market also got some help from macroeconomic data. Figures showed Germany's services sector expanded at its fastest rate in three years this month, pointing to a timely broadening of the recovery in Europe's largest economy.
