European stocks have risen with the pharmaceuticals sector given a shot in the arm by news of US giant Pfizer's $US100 billion ($A108.14 billion) merger offer for British rival AstraZeneca.
Drugmakers have also been lifted by impressive earnings from Germany's Bayer and upbeat news from France's Sanofi.
London's benchmark FTSE 100 index of leading companies advanced 0.22 per cent on Monday to 6,700.16 points at close.
Frankfurt's DAX 30 gained 0.48 per cent to 9,446.36 points and in Paris the CAC 40 added 0.38 per cent to 4,460.53 compared with Friday's closing levels.
Pfizer said on Monday it wanted a blockbuster tie-up with AstraZeneca to fuel cancer research, taking its merger hopes public after the British company rejected earlier overtures worth almost $US100 billion.
In reaction, AstraZeneca's share price surged 14.38 per cent to 4,666.5 pence, bringing the FTSE up along with it.
Rival drug makers GlaxoSmithKline and Shire Pharmaceuticals climbed 0.82 per cent and 2.37 per cent to stand at 1,668.55 pence and 3,286.00 pence, respectively.
"It was the pharmaceutical sector that was still the talk of the market with GSK, Shire and AstraZeneca all leading the FTSE," said Farhan Ahmad, trader at brokerage Tradenext.
"Pfizer is still perusing the takeover of AstraZeneca .... With the prospect of one of the largest ever takeovers in the sector, AstraZeneca shareholders could be tempted."
Chemicals and pharmaceuticals giant Bayer, maker of Aspirin, added on Monday that it turned in a better first-quarter performance than expected thanks to healthy growth driven by new products.
Net profit rallied 23 per cent to 1.42 billion euros ($A2.12 billion) between January and March, compared with a year earlier.
In reaction, Bayer's share price rallied 3.32 per cent to 98.95 euros in Frankfurt.
In Paris, French drugs group Sanofi revealed it had successfully completed the first of two Phase III clinical studies of a proposed dengue vaccine. That sent its share price jumping 1.75 per cent to 76.75 euros.
In New York, Wall Street was mixed in midday trading, with merger talk pushing the Dow Jones index up 0.21 per cent but concerns over the share prices of major tech stocks dragging the Nasdaq down 0.66 per cent.
The chatter on a possible Pfizer-AstraZeneca merger boosted the British pound, which was also lifted by expectations of strong first-quarter economic growth data on Tuesday.
Sterling ended at $1.6815 after earlier hitting the highest level since November 2009, $1.6858. That compared with $1.6798 on Friday.
The euro rose to $1.3845 from $1.3832 late in New York on Friday. The European single currency firmed to 82.34 British pence from 82.32 pence.
The euro firmed to 141.90 yen from 141.36, having reached 142.15, the highest for three and a half weeks.
However, the Swiss franc rose to 1.2193 to the euro and 0.8806 to the dollar.
The Yuan fell to 6.2524 to the dollar from 6.2527 late on Friday, when it had closed at the lowest level for 18 months.
On the London Bullion Market, the price of gold fell back after early gains to close at $1,299.00 an ounce from $1,301.25 on Friday.
Asian markets were mostly lower, with tensions in Ukraine adding to selling pressure.