By Shristi Achar A
(Reuters) - European shares rose on Monday as they tracked a Wall Street rally that drove the benchmark S&P 500 to a record peak in the previous session, while investors awaited the European Central Bank's policy decision due this week.
The pan-European STOXX 600 index was up 0.6%, as of 0910 GMT, following a 1.5% decline last week.
The S&P 500 index scaled a record high on Friday, the first in two years, fuelled by a rally in U.S. chipmakers and heavyweight technology stocks.
Technology stocks in the euro zone climbed 1.4% on Monday, and led gains among sectoral indexes.
Adding to the sector's gains, ASML (AS:ASML) Holdings rose 2.5% after Bernstein upgraded the Dutch semiconductor equipment maker's rating to "outperform" from "market-perform".
Yield on the benchmark German 10-year government bond also moved lower, last standing at 2.280%, helping the bounce in equities.
Investors are waiting for the ECB's monetary policy decision, due on Jan. 25, to ascertain the timing of interest rate cuts from the central bank.
"No new policy decision is expected, but the market would be looking for any clues around the first rate cut," said Mohit Kumar, chief economist Europe at Jefferies.
"We expect Lagarde to stress the data dependent nature of the policy and indicate that it would be premature to start talking about rate cuts."
Traders have priced in a cut of about 100 basis points in interest rates this year, with a 96% chance of the first cut coming in June. [0#ECBWATCH]
The banking sector jumped 1.3%, helped by a 3.1% gain in Barclays after an upbeat view from Morgan Stanley, ahead of the British bank's annual results and investor update next month.
On the flipside, Commerzbank (ETR:CBKG) shed 3.4% after BofA Global Research cut the German lender to "underperform" from "neutral."
Among other movers, shares of Kindred jumped 16.5% after French gaming company La Francaise des Jeux launched a takeover offer for its European online peer in a $2.8 billion deal. La Francaise's shares climbed 4.0%
Worldline rose 4.7% after Credit Agricole (OTC:CRARY) disclosed a 7% equity stake in the French digital payments firm.
Belimo was a laggard, down 7.8%, after the Swiss heating and ventilation solutions maker's 2023 revenues missed market estimates.