Europe open: Stocks edge higher as M&A lends a hand

European stocks edged higher in early trade, underpinned by M&A news and an upbeat session in the US, where the Dow powered through the 20,000 level for the first time.

At 0900 GMT, the benchmark Stoxx Europe 600 index and Germany’s DAX were up 0.4%, while France’s CAC 40 was 0.2% firmer.

David Morrison, senior market strategist at SpreadCo, said: “It’s been another positive open for European equity markets following a strong session on Wall Street yesterday. Investors rushed to load up on US equities as the Dow surged through 20,000 on the open. It was just 64 days ago that the Dow broke above 19,000 and it’s worth mentioning that it hasn’t once retested that level. The Dow has spent the last six weeks consolidating just below 20,000 and there’s now a feeling that there’s plenty of pent-up buying pressure ready to push US stock indices significantly higher from here. Certainly, Monday’s brief wobble which followed President Trump’s protectionist rhetoric has been largely forgotten, even as the new president insists he will push ahead with a Mexican wall and trade tariffs.

“But for now, investors are more bulled up with Trump’s apparent energy and the speed with which he signed executive orders to expedite the Keystone XL and Dakota Access pipelines. Those that warned that the Trump honeymoon rally would end with his inauguration have to face the possibility that it’s only just started.”

In corporate news, Swiss biotech group Actelion rocketed after agreeing to be bought by Johnson & Johnson for $30bn.

STMicroelectronics rallied on the back of well-received fourth-quarter earnings.

Royal Bank of Scotland edged higher as it has confirmed it will take a further £3.1bn provisions to pay off a looming penalty in the US for its sale of residential mortgage-backed securities in the run up to the financial crisis. RBS said on Thursday that it has set aside a total of £6.7bn, which would reduce its tangible net asset value per share at 30 September 2016 by 27p to 311p.

Anglo American ticked up after it said production was higher in the fourth quarter, although copper output declined, while Diageo was in the black as it reported a 28% jump in first-half operating profit.

On the downside, Unilever was in the red after it posted lower-than-expected sales for the fourth-quarter.