European shares rose on Monday as investors bet on big U.S. banks continuing to post strong quarterly results this week, while also looking forward to the Federal Reserve's rate-hiking cycle nearing an end.
The pan-European STOXX 600 index (.STOXX) edged 0.3% higher, after hitting its highest in over a year last week, while the blue-chip STOXX50 index (.STOXX50) hit a 22-year peak.
Investors will closely monitor a slew of earnings reports led by Goldman Sachs (GS.N), Morgan Stanley (MS.N) and Bank of America (BAC.N) due later in the week.
Last week, Citigroup Inc (C.N), JPMorgan Chase & Co (JPM.N) and Wells Fargo & Co (WFC.N) beat earnings expectations, benefiting from rising interest rates and easing fears of stress in the banking system.
"Cautious optimism is the Monday motivation mantra, as stronger U.S. corporate news and signs of consumer resilience help to mask ongoing worries about the knock-on effect of higher interest rates," said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
Meanwhile, money market participants see a 64% chance of the Fed hiking its key benchmark rate by 25 basis points to 5.00%-5.25% in May before pausing its rate hikes, according to the CME Group's Fedwatch tool.
Commentary from European Central Bank (ECB) officials including President Christine Lagarde will also be on investors' radar.
Having started the year on a strong footing as the energy crisis abated and China's economy reopened from COVID-related lockdowns, European shares retreated after the collapse of two U.S. lenders, a forced rescue of Credit Suisse and uncertainty over interest rate outlook.
German central bank chief Joachim Nagel said on Friday that the ECB needs to keep raising interest rates even if most of its past hikes have yet to feed through to the economy, as rapid price growth was at risk of getting entrenched.
Payments providers Worldline (WLN.PA) and Nexi (NEXII.MI) were both up around 4%, boosted by takeover proposal for companies' peer Network Intentional (NETW.L).
Shares of Rovio (ROVIO.HE) rose 17.9% after Japan's Sega (6460.T) agreed to launch a 706 million euro offer for Angry Birds maker.
John Wood Group (WG.L) added 7.5% after it decided to engage with Apollo Management for a firm offer from the private equity firm for a final buyout price of 240 pence per share, which values the group at about 1.66 billion pounds ($2.06 billion).
