By Danilo Masoni
MILAN (Reuters) - European shares rose on Monday as financials gained ground amid fresh dealmaking activity, although Julius Baer tumbled after its chief executive unexpectedly quit to join a rival company.
The pan-European STOXX 600 (STOXX) index rose 0.2 percent by 0939 GMT, reversing earlier weakness and led higher by gains among insurance stocks (SXIP) after Allianz (DE:ALVG) struck a deal to buy out France's Euler Hermes (PA:ELER).
Shares in Germany's biggest insurer rose 0.7 percent after it agreed to buy the shares in the French credit insurance firm it did not yet own for around 1.85 billion euros.
Analyst said the deal looked expensive although it made strategic sense for Allianz, whose shares have risen more than 30 percent over the last 12 months.
"We believe the minority buyout is a strategically sensible move as it is a low-risk way to increase the exposure to the attractive credit insurance business segment," Baader Helvea analyst Daniel Bischof said in a note.
Euler Hermes shot up 20 percent.
Commerbank (DE:CBKG) rose 1 percent after Swiss paper Neue Zuercher Zeitung am Sonntag reported that UBS (S:UBSG) had formed a team to look into strategic options such as buying parts of the German lender.
Shares in UBS (S:UBSG), which declined to comment, edged lower.
Julius Baer (S:BAER) however was a weak spot among financial stocks, down 4.7 percent after news that CEO Boris Collardi was resigning with immediate effect to take a post at rival Pictet.
Analyst cited worries that the move could also result in the loss of client assets.
Elsewhere, chipmakers such as AMS AG (S:AMS) and Infineon (DE:IFXGn) fell with traders citing a drop in shares in Samsung Electronics (KS:005930) following a Morgan Stanley (NYSE:MS) downgrade on concerns the chip memory boom could peak soon.
Among country benchmarkets, German DAX benchmark (GDAXI) rose 0.1 percent with investors keeping a close eye on efforts to form a working government.
Leaders of Chancellor Angela Merkel's conservative party agreed on Sunday to pursue a "grand coalition" with the Social Democrats (SPD) to break the political deadlock.
Among top movers on the STOXX were also shares in Belgian supermarket firm Colruyt (BR:COLR), down 4.5 percent after Deutsche Bank (DE:DBKGn) cut its price target on the stock, while French tech company Ingenico (PA:INGC), up 3.4 percent, was supported by a Morgan Stanley upgrade to equal-weight.