LONDON, Feb 2 - European shares rose on Monday, lifted by fresh takeover speculation in the drug sector, but cellphone giant Vodafone eased amid worry it was about to embark on a pricey U.S. acquisition trail. Elsewhere in the market, Britain's Securicor said it was in talks to merge with Denmark's Group 4 Falck in a nil-premium deal that would step up competition to the world's biggest security firm Securitas of Sweden. Talk of such a deal had already been circulating in the market. Securicor shares rose three percent to 116.4 pence, while Group 4 shares were not yet trading. By 0823 GMT, the FTSE Eurotop 300 index <.FTEU3> was up 0.4 percent at 985 points, still within easy striking distance of its 17-month highs of earlier this month. The narrower DJ Euro Stoxx 50 index <.STOXX50E> rose 0.5 percent to 2,854 points. Stocks appear to have run out of steam in recent sessions after a lengthy run up, with analysts saying that much of the good news delivered so far in the earnings season had already been factored into share prices. Nevertheless, J.P. Morgan investment bank said on Monday it remained "overweight" in equities, and cut its weighting in bonds and raised its cash holdings to neutral.
"One concern that we hold for equities is that when one looks at risk measure, there now appears to be complacency in a number of areas," said JP Morgan's global equity strategist Abhijit Chakrabortti. The risks included the failure of oil prices to decline; a sharp improvement in labour markets which could then trigger interest rate rises in the United States; and the risk of a sharp slowdown in China. The Institute of Supply Management's index of U.S. business activity in January, due at 1500 GMT, is keenly awaited after a stronger-than-expected leap in the Chicago Purchasing Management index on Friday. The week's other top number will be Friday's U.S. non-farm payrolls. The Group of Seven meeting of richest nations at the end of the week will be closely watched for any impact on the sliding dollar which has unnerved stock market investors at times. Investors may also keep their powder dry before the week's heavy calendar of earnings reports, economic figures, and bets for an interest rate hike from the Bank of England on Thursday.
M&A WATCH
In the pharmaceutical sector, the Financial Times reported that French drugmaker Aventis has identified four potential merger partners as alternatives to a hostile takeover from domestic rival Sanofi-Synthelabo . Aventis's executive board, has named Novartis , GlaxoSmithKline , Johnson & Johnson and Pfizer as merger candidates, according to the report, which quoted a participant at last Wednesday's board meeting. Aventis shares edged higher, while Sanofi eased. Shares in Glaxo and Novartis were slightly firmer. In telecoms, Britain's Observer newspaper said the chief executive of Britain's Vodafone is believed to have told financial advisers to draft documents to try to persuade investors that a bid of about $30 billion for AT&T Wireless of the United States is a good idea. Vodafone shares fell 0.7 percent to 136-1/2 pence. Deutsche Telekom , which also has mobile operations in the United States, shed 0.2 percent. Meanwhile, Swiss staffing firm Adecco , whose shares jumped on Friday, said over the weekend it would take months rather than weeks to sort out its bookkeeping problems. The stock gained a further 0.3 percent in early trading. Among the day's early earnings reports, mining company Rio Tinto reported in-line net profits, and gave a bullish outlook, but the stock fell 0.6 percent. In New York on Friday, the Dow Jones industrial average <.DJI> closed down 0.2 percent 10,488.07 points, and the tech-laden Nasdaq Composite <.IXIC> ended off 0.1 percent at 2,066.15 points.//