Europe open: Shares open higher as IDS, Rovio make strong gains

European shares opened higher on Monday as investors cheered a potential end to the pay dispute at Royal Mail owner IDS and looked ahead to another week of major US earnings.

The pan-European Stoxx 600 index was up 0.3% at 0705 GMT with all major bourses higher. US futures indicated a positive start for Wall Street.

“Cautious optimism is the Monday motivation mantra, as stronger US corporate news and signs of consumer resilience help to mask ongoing worries about the knock-on effect of higher interest rates. Although Wall Street closed lower on Friday, stocks in Asia eked out gains and European indices are set to edge up again,” said Hargreaves Lansdown analyst Susannah Streeter.

“But worries about how many rate hikes could still be the sights of the Federal Reserve are still bubbling away in the face of growing consumer confidence and higher inflation expectations and could erupt back up to the surface.”

In equity news, shares in IDS gained almost 5% after the Communication Workers Union and Royal Mail management reached an agreement in principle aimed at ending a long-running strike over pay.

“The walk-outs have put the group into a precarious position in terms of liquidity. It’s delayed the group’s attempt to re-size operations in the face of falling letter and parcel volumes and has meant the group will only have limited breathing room when it comes to its loan agreements,” said Streeter.

Shares in videogame maker Rovio surged by 17.88% after Japan's Sega agreed to launch a €706m offer for the Angry Birds maker.

Wood Group gained 7.74% after the company decided to engage with Apollo Management for a firm offer from the private equity firm for its last buyout price of 240 pence per share.

Reporting by Frank Prenesti for Sharecast.com