Stocks rose on Tuesday, with a potential trans-Atlantic corporate takeover boosting sentiment already buoyed by a growing conviction that the first rise in U.S. interest rates since 2006 won't come until after the summer.
FedEx Corp (FDX.N) made a 4.4 billion-euro ($4.8 billion) bid to buy Dutch package-delivery company TNT Express (TNTE.AS), sending TNT shares jumping almost a third in value and lifting shares across the sector and beyond.
The merger and acquisition feel-good factor for stocks dovetailed with generally low government bond yields, as expectations of the Federal Reserve's first rate move continue to cool after last Friday's U.S. employment report for March.
The pan-European FTSEurofirst index of leading 300 shares was up 1.5 percent around midsession at 1606 points .FTEU3, on track for its best day since Jan. 23. Shares in TNT Express were up 30 percent, easily the biggest gainers in Europe.
France's CAC 40 .FCHI and Britain's FTSE 100 .FTSE were also up 1.5 percent, and Germany's DAX .GDAXI was up 1.2 percent. Spain's IBEX hit its highest level since January 2010 .IBEX.
"The jump in Europe was bolstered by M&A amongst parcel delivery giants FedEx and TNT. It could be the beginning of a year-long trend of U.S. companies putting their strong dollars to work in Europe," said Jasper Lawler, analyst at CMC Markets.
"Estimates for the timing of the first U.S. rate hike have been pared back too, after the disappointing non-farm payrolls report over Easter."
U.S. stock futures were pointing to a slightly higher open on Wall Street DJc1 SPc1 NDc1.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.3 percent, Japan's Nikkei .N225 rose 1.2 percent and Chinese stocks climbed more than 2 percent to a seven-year high as the quarterly earnings season approached .SSEC.
RBA ON HOLD, AUSSIE DOLLAR JUMPS
In currencies, the biggest mover was the Australian dollar, which rallied more than 1 percent after the country's central bank surprised some by leaving interest rates at a record low 2.25 percent.
The Aussie was up 1.2 percent at $0.7680 AUD=D4, pulling away from the six-year low of $0.7534 plumbed last week.
But given the risks facing the Australian economy, such as sliding prices for iron ore, the country's biggest export, the central bank did leave the door open for future action, saying further easing might be appropriate.
The euro was down 0.5 percent at $1.0860 EUR=, yet again failing to hold above $1.10. Earlier on Tuesday, it rose as high as $1.1036.
The euro's fall was in large part led by its weakness against sterling after data showed that UK services expanded at a faster rate in March than all 30 economists polled by Reuters had expected. The euro was down two thirds of one percent below 73 pence EURGBP=.
The dollar's rebound on Tuesday returned it to where it was just before last Friday's U.S. employment report, which showed sub-par job creation in March and downward revisions to the pace of hiring in the previous two months.
The 10-year Treasury yield trod a similar path, little changed from Monday around 1.90 percent but having recovered from two-month lows struck immediately after the data on Friday.
Comparable German yields were also little changed from the previous trading session at around 0.19 percent EU10YT=RR. Greek and other peripheral euro zone yields were all as much as 8 basis points lower.
Greek Finance Minister Yanis Varoufakis said on Sunday that Greece "intends to meet all obligations to all its creditors, ad infinitum," seeking to quell fears of a default before a big loan payment Athens owes the International Monetary Fund later this week.
"Varoufakis pledged to meet this week's upcoming 440 million-euro IMF payment on Thursday, easing earlier concerns that the government was to prioritize wages and pension payments over the repayment," said Deutsche Bank strategist John Reid.
In commodities, crude oil gave back some of the gains made overnight as the market reassessed how quickly Iran might increase exports after a preliminary nuclear deal. Goldman Sachs said prices needed to remain low for months to achieve a slowdown in U.S. output growth. [O/R]
U.S. crude CLc1 was down 1 percent at $51.60 a barrel after rallying 6 percent on Monday. Brent shed 0.7 percent to $57.70 a barrel LCOc1 following its 5.7 percent jump.
Gold retreated as the dollar rebounded. It was last down to $1,210 an ounce after hitting a seven-week peak of $1,1224.10 on Monday.
