By Susan Mathew and Medha Singh
(Reuters) - European shares recovered from early losses on Monday, fueled by a surge in the London Stock Exchange Group on its potential deal to buy financial data firm Refinitiv, while investors waited anxiously for an expected U.S. interest rate cut.
Shares of LSE (L:LSE) surged 14.6% to an all-time high after the exchange operator said it was in discussions to buy Refinitiv Holdings from U.S. buyout fund Blackstone Group (N:BX) for $27 billion, including debt.
That helped London's FTSE (FTSE) rise 1% and outperform major European peers, with other deal talks and weakness in the British pound also supporting the blue-chip index.
Britain's Just Eat (L:JE) soared 25.3% on news that it was in talks to be bought by rival online food delivery firm Takeaway.com (AS:TKWY) in a potential 8.2-billion-pound ($10.1 billion) all-share deal.
The pan-European stocks benchmark index (STOXX) was up 0.2% by 0818 GMT at the start of a week that is expected to be dominated by meetings at major central banks.
The U.S. Federal Reserve is widely expected to lower rates this Wednesday for the first time in a decade, but investors will look for clues on its future rate plans. Last week, European Central Bank chief Mario Draghi disappointed investors with less-dovish-than-expected remarks.
Stocks have rallied since a steep fall in May on hopes that major central banks would ease monetary policy to stave off any further slowing in global growth as trade war risks persist.
Meanwhile, the Bank of England on Thursday is expected to swim against the tide of looser policy sweeping major central banks and keep alive the prospect of future rate hikes.
U.S. and Chinese trade negotiators will meet in Shanghai this week for their first in-person talks since a G20 truce last month, but expectations are low for a breakthrough.
"The upside is there won't be any new tariffs in the short to medium term," said Michael Hewson, chief market analyst at CMC Markets UK.
"But U.S. President Donald Trump has got what he wanted, which is a Fed rate cut. I don't think we are going to make any significant progress (on trade talks) before the year end."
Trade sensitive auto stocks (SXAP) fell 0.8%, the most among the major sectors.
Healthcare stock were mixed with Sanofi (PA:SASY) rising 2.8% after boosting its 2019 outlook, while Novartis (S:NOVN) dropped 1.3% as a trial for a new use of its Entresto heart drug failed.
Heineken (AS:HEIO) slumped 5.3% after the world's second largest brewer missed estimates for first-half profit.