European shares recorded a slight rise on Monday as investors digested a surprise bid from UniCredit and weighed fresh geopolitical developments in the Middle East.
The pan-European benchmark STOXX 600 was up 0.1% at 596 points, as of 0817 GMT. That index remains below its peak from February - it has fallen nearly 6% since reaching a record high in February, just prior to the outbreak of the Middle East conflict.
Commerzbank led the banking names after news that UniCredit launched an offer to acquire a 30% stake in the German lender. Shares of Commerzbank gained 3.5% on the move, while UniCredit shares slipped 0.5%.
UniCredit has said it does not expect to reach control of Commerzbank. The Italian bank currently holds a 26% equity stake and an additional 4% exposure through total return swap contracts in the German lender.
Defence stocks also strengthened, advancing roughly 1% as European Union foreign ministers prepared to meet later in the day to discuss strengthening a small naval mission in the Middle East. The moves followed remarks from U.S. President Donald Trump calling to keep the Strait of Hormuz open, a key shipping lane.
Markets in Asia were mixed as the U.S.-Israeli war on Iran enters its third week. Iranian actions have constrained traffic through the Strait of Hormuz, which serves as a conduit for around one-fifth of global oil and liquefied natural gas, creating a material risk to the global economy.
Energy majors received a lift from high oil prices, with Shell and BP adding 1% and 2%, respectively, as crude oil remained above $100 a barrel.
Attention in markets this week will focus on interest-rate decisions in the U.S., the UK, Europe and Australia. These central banks are holding their first full meetings since the start of the war and are widely expected to pause further rate cuts for now.
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