Europe close: Stocks end session little changed

European stocks pared earlier gains to trade flat to slightly lower on Monday as investors weighed up a failed military coup in Turkey against some encouraging company deal news.

The benchmark Stoxx Europe 600 index edged higher by 0.23% or 0.78 points to 338.70, Germany’s DAX was 0.04% weaker and France’s CAC 40 was down 0.34%.

At the same time, oil prices were lower, with West Texas Intermediate off by 1.569% to $45.24 per barrel and Brent crude down 1.5% at $46.90.

Six thousand people were arrested following Friday night’s attempted military coup in Turkey and President Recep Tayyip Erdogan said parliament would consider re-introducing the death penalty for those thought to have committed traitorous acts against the state.

Chris Beauchamp, senior market analyst at IG, said: “The weekend was dominated by news of the coup in Turkey, but so far the impact seems to be limited outside of emerging market assets.”

Stocks were initially buoyed by news that chip designer ARM Holdings had agreed a £23.4bn takeover offer by Japan's Softbank, in what could be the first major move sparked by the post-Brexit collapse in the value of the pound. ARM surged, with peers such as Dialog Semiconductor and Imagination Technologies also sharply higher.

Beauchamp said: “It would not be surprising to see other bids for UK firms that have now become cheaper thanks to the fall in sterling, so the ARM deal could simply be the first in a procession of deals. It won’t be an ugly rush, since ongoing political uncertainty will make it even more important for acquisitive firms to pick their targets carefully, and questions will linger over just how protectionist the UK may become with regards to some of its prized assets. Nonetheless, as a sign of confidence, the deal is very welcome indeed.”

Travel and leisure stocks were under pressure, with Thomas Cook and TUI both in the red amid worries about the impact of the coup in Turkey.

Elsewhere, AstraZeneca nudged higher after announcing that its Phase III AURA3 trial has met its primary endpoint, demonstrating superior progression-free survival (PFS) compared to standard platinum-based doublet chemotherapy.

SBM Offshore rallied after the Dutch offshore engineer reached a deal with Brazilian authorities in a corruption probe.

Glencore was under the cosh after Credit Suisse cut its rating on the stock to ‘neutral’ from ‘outperform’.

Investors were also mulling over comments by Bank of England policymaker Martin Weale, who said the central bank needs more information on the impact of the UK’s vote to leave the European Union before cutting interest rates.

Speaking in London on the implications of Brexit for monetary policy, Weale said there was a high level of uncertainty surrounding the vote.

“Uncertainty points to the argument that we should wait for firmer evidence before making any policy change,” Weale said.

“The argument in the other direction is that, while I am very uncertain about the magnitude of the effect, it does seem to me quite likely that demand will weaken more than supply in the near term. So is there a case for a stitch in time?”