European shares rise as NAFTA deal lifts sentiment

LONDON (Reuters) - European shares rose on Monday morning as optimism on the trade war front was lifted by a new U.S.-Mexico-Canada agreement, which is helping world markets enter the fourth quarter on a positive footing.

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, September 27, 2018. REUTERS/Staff

At 0820 GMT, the euro zone benchmark .STOXX50E was up 0.4 percent with most European bourses and sectors trading in positive territory.

“News overnight of a late agreement between the U.S. and Canada to salvage the NAFTA trade agreement should give a boost to global risk appetite at the start of the fourth quarter,” wrote Peel Hunt strategist Ian Williams, adding the deal “may offer encouragement that the other global trade disputes can settled satisfactorily.”

Ryanair RYA.I was the worst performer, down 7.5 percent after it cut its forecast for full-year profit and said there could be worse to come if recent coordinated strikes across Europe continue to hit traffic and bookings.

The low-cost carrier's fall weighed on the wider sector .SXTP which was one of the only ones in the red, down 0.6 percent.

Peer Easyjet EZJ.L, Air France-KLM AIRF.PA and BA owner IAG ICAG.L were down 4.1 percent, 2.6 percent and 1.4 percent respectively.

Germany's Linde LING.DE posted the highest rise, climbing 6.3 percent after it received approval for its proposed $83 billion merger with Praxair PX.N from the Chinese antitrust authorities.

French supermarket group Casino CASP.PA was up 0.3 percent after it said it had agreed to sell some property assets for 565 million euros ($655 million) to reduce debt levels that have worried investors.

Italian banks .FTIT8300 were up 0.5 percent after suffering their worst fall in about two years on Friday on fears the populist government's decision to increase its deficit target could threaten the long-term sustainability of its sovereign debt.

On Sunday, Italian daily La Repubblica reported that the European Commission was set to reject Italy’s budget plans in November and open a procedure against the country’s public accounts.

The Milan bourse was up 1 percent, making it the best performer among European trading centers, as it rebounded from a 3.7 percent drop on Friday.

Julien Ponthus and Danilo Masoni; Editing by Raissa Kasolowsky