Europe shares boosted by M&A, US mortgage rescue

European shares rose on Monday in a session dominated by merger activity that swept through sectors, including brewers and banks, while a U.S. mortgage rescue plan underpinned the broader equities market.

Stocks globally took heart from a U.S. Treasury and Federal Reserve plan to lend money and buy equity if needed in the government-sponsored enterprises, which own or guarantee $5 trillion in debt — close to half of the value of all U.S. mortgages.

But fresh concern about the impact of the credit crisis on the financial sector stripped U.S. stocks of their early gains and pushed European shares down from the day's highs by the close of trade.

The FTSEurofirst 300 index of top European shares ended up 0.76 percent at an unofficial 1,134.91 points, after having risen earlier by as much as 1.8 percent.

"The market in some ways is relieved that the authorities in the United States have been able to come up with a solution to the problem of funding for Freddie Mac and Fannie Mac, however, there is a realisation that there are still some fundamental factors which are creating negative sentiment in the global markets right now," said Barclays Stockbrokers strategist Henk Potts.

Banks were the top gainers, helped in part by the U.S. mortgage plan, and by Spain's Santander, which said it would buy British bank Alliance & Leicester. A&L surged 52 percent, while Santander rose 0.4 percent. (Reuters)