European stock markets fizzed higher Tuesday on takeover froth across the region, with sentiment also boosted by bargain-hunting after recent China-inspired losses, dealers said.
In early afternoon trade, London's benchmark FTSE 100 index of blue-chip companies won 0.84 percent to 6,559.60 points, buoyed also by data showing the British economy rebounded by 0.7 percent in the second quarter.
Frankfurt's DAX 30 added 1.40 percent to 11,211 points and the CAC 40 in Paris rose 1.17 percent to 4,985.30 points compared with Monday's close.
The euro nudged lower to $1.1060 from $1.1091 late in New York on Monday, amid persistent jitters over Greece.
"There has been some potential merger and acquisition activity ... after Zurich Insurance said that it is weighing up a bid for RSA Insurance, a British insurer," said analyst David Papier at trader ETX Capital.
In reaction, RSA shares surged by 14.44 percent to 501 pence, topping the FTSE leaderboard.
"Zurich Insurance Group notes the recent market speculation in relation to RSA Insurance Group plc and confirms that the company is evaluating a potential offer for RSA Insurance Group plc," it said in a brief statement.
"This announcement does not amount to a firm intention to make an offer and there can be no assurance that any offer will be made."
Meanwhile, shares in British engineering firm GKN jumped 6.61 percent to 314.50 pence after agreeing to purchase Dutch aerospace company Fokker Technologies Group.
- Drugs in focus -
The pharmaceuticals sector was also in focus as London-listed group Hikma bought US generic drugs company Roxane from German peer Boehringer Ingelheim for $2.65 billion (2.40 billion euros) in the sector's latest rapid round of consolidation.
The deal will transform Hikma into the sixth largest player in the US generics market, in terms of revenue, said a statement from Hikma, which is based in Amman, Jordan.
Hikma's London share price rallied 7.69 percent to 2,240 pence following the news.
Generic drug companies are under pressure to do deals because there are fewer big-money drugs shifting to generic status after patent expiries compared with a few years ago.
The deal comes one day after Israeli pharmaceutical giant Teva snapped up the generic drugs business of Allergan for $40.5 billion, consolidating its position as a world leader in generics.
European equities also rebounded Tuesday as investors fished for bargain stocks.
"The fact that we’re coming off the back of five consecutive daily declines (in London) has prompted some bargain-hunting on the part of some investors," noted analyst Michael Hewson at trader CMC Markets.
The region's equity markets had fallen sharply on Monday as investors reacted to the biggest one-day plunge in Chinese equities in more than eight years.
However, Asian indices mostly fell again Tuesday, with Shanghai seeing another round of wild volatility.
Fears of a resumption of another rout on Chinese shares sent global traders running Monday, with Wall Street falling for a fifth day in a row and safe-haven gold edging back up after a recent slip.
On Tuesday, Shanghai stocks ended just 1.68 percent lower, having collapsed by 8.48 percent on Monday.
However, Hong Kong -- which sank more than three percent on Monday -- clawed back early losses to end up 0.62 percent.
Elsewhere, Tokyo dipped 0.10 percent and Sydney edged down 0.09 percent.
Chinese investors rushed for the exit Monday as more data showing the economy still struggling combined with fears that government measures to prevent a market crash -- including providing vast sums to support shares -- would not last.
Markets meanwhile awaited this week's US Federal Reserve's monetary policy meeting for a handle on its plans for interest rates. The Fed will announce the outcome on Wednesday.