Oil stocks, Sanofi push Europe shares to 4-mo high

By Eva Kuehnen

FRANKFURT, May 16 (Reuters) - European shares rose to a four-month high on Friday, lifted by pharmaceutical stocks after positive data for a Sanofi-Aventis (SASY.PA) heart drug, while energy shares powered higher with oil around $125 a barrel. By 0942 GMT, the pan-European FTSEurofirst 300 index .FTEU3 was up 1 percent at 1,373.59 points, its highest since Jan. 18 and rising for a third consecutive session. The index has gained about 1.3 percent so far this week.

"Optimism seems to have returned to the market now. While the market played doom and gloom in mid March we are more positive for the coming weeks and months," said M.M. Warburg chief economist Carsten Klude.

Sanofi was among the heavyweights lifting the index. Its shares rose 3.6 percent as investors welcomed positive clinical trial results for heart drug Multaq, which some analysts believe could sell more than $2 billion a year.

The DJ Stoxx European drugs sector .SXDP rose 0.7 percent with AstraZeneca (AZN.L) up 2.2 percent, Roche (ROG.VX) up 0.3 percent and Novartis (NOVN.VX) up 0.7 percent.

Oil majors such as Total (TOTF.PA), BP (BP.L) and Royal Dutch Shell (RDSa.AS) gained more than 1 percent each as the oil price rose. U.S. crude CLc1 rose 95 cents to $125.07 a barrel.

Against the background of higher oil prices, investors scrutinised an earnings update from British Airways (BAY.L).

The airline's stock rose 7 percent after it unveiled its first dividend payment since 2001 and met forecasts with a 45 percent rise in annual profit.

Germany's Lufthansa (LHAG.DE) was up 3.2 percent, leading gainers in the country's blue-chip DAX index .GDAXI, which was up 1.1 percent.

Elsewhere in Europe, the UK's FTSE 100 index .FTSE rose 1.5 percent and France's CAC 40 .FCHI added 1 percent.

TAKEOVER FIZZ

Among major gainers, British Energy BGY.L shares rose 6.5 percent after it said it has received a range of takeover proposals, some above Thursday's closing price. Takeover speculation also pushed stocks in BHP Billiton (BHP.AX) (BLT.L) higher in Australia overnight, but the world's largest miner only edged up 0.5 percent in London as traders said talk that Chinese interests were looking to build a stake in the miner was priced in during the previous trading session.

Gerhard Schwarz, head of global equity strategy at UniCredit said: "We don't have a huge takeover wave any more with mega buyouts as seen last year. That's missing."

"M&A has stalled so far this year in Europe. This may change, but at the moment I don't see it. We expect to see falling economic indicators in coming months and I can't imagine that companies are planning major deals in this environment."

Technology stocks were stronger, tracking their U.S. peers, which rose on a battle to control Yahoo (YHOO.O). Nokia (NOK1V.HE) and Siemens (SIEGn.DE) rose more than 3 percent each.

Deutsche Telekom (DTEGn.DE), trading ex-dividend, fell 5 percent. (Editing by Louise Ireland)