European shares rise on airline surge, upbeat earnings

(Reuters) – European shares rose on Monday, as airline stocks soared on hopes of state support, while a slew of upbeat earnings added to optimism over signs many countries would soon ease tough lockdown measures.

Shares of Lufthansa jumped 7.2%, with Berlin expected to decide on state support, while Air France KLM rose 5.2% after the government said it would give a 7-billion-euros ($7.6 billion) aid package.

Positive quarterly reports also helped. German drugs and pesticides company gained 2.8% and Deutsche Bank jumped 7.7% after their first-quarter earnings topped market expectations.

The pan-European STOXX 600 <.STOXX> rose 1.7% by 0720 GMT, following gains in Asian markets after the Bank of Japan pledged to buy unlimited amount of bonds to keep borrowing costs low.

The European benchmark ended with weekly losses on Friday, hit by the lack of details in a trillion-euro emergency fund agreed by the euro zone leaders. However, investors are pinning hopes on further stimulus expansion by the European Central Bank, which is scheduled to meet on Thursday.

Shares in Adidas , however, fell 1.6% as it reported a 93% plunge in first-quarter profit, and warned of a deeper hit to second-quarter revenue as lockdowns forced it to close stores.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Sriraj Kalluvila)