By Danilo Masoni
MILAN (Reuters) - Fresh dealmaking activity helped support European shares on Thursday, although investors remained cautious on worries over the prospect of U.S. military action in Syria.
U.S. President Donald Trump warned Russia this week of an imminent military action in Syria over a suspected gas attack, declaring that missiles "will be coming" and lambasting Moscow for standing by Syrian President Bashar al-Assad.
"We may well see a military response by the end of the week, as the situation in Syria ramps up further, and this may well temper investor enthusiasm to buy back into the market ahead of the weekend," said CMC market analyst Michael Hewson.
However, investors found some comfort in some merger and acquisition developments.
Firstgroup (L:FGP) spiked 9 percent after news it rejected a takeover approach from Apollo, while Playtech (L:PTEC) rose 8.2 percent after it agreed to buy Italian betting firm Snaitech (MI:SNAI) in a $1 billion deal. Snaitech was up 14.8 percent.
The tensions over Syria kept crude oil prices near 4 year highs, helping energy stocks advance 0.5 percent. [O/R]
In earnings some disappointing updates weighed.
Sulzer (S:SUN) rallied 15 percent after the Swiss pumpmaker said it freed itself of U.S. sanctions after authorities approved its buyback of shares that has reduced to less than 50 percent the stake of Russian oligarch Viktor Vekselberg, chairman of holding company Renova.
The relief bounce however made up for only part of the 22 percent share price drop Sulzer suffered since the sanctions were announced last week, as some investors remained cautious.
"The fact that renewed sanctions could be imposed at a future point in time cannot be ruled out," Zuercher Kantonalbank analyst Armin Rechberger said in a note.
"Renova could strive for reducing its respective equity interest in Sulzer (now 48.8 percent), Oerlikon (43 percent), Schmolz & Bickenbach (42 percent) and Zueblin (43 percent), which would lead to sell-off pressure," he added.