MILAN, Dec 7 (Reuters) - European auto shares surged more than 3 percent to their highest level since mid-January with investors lured by their low valuations and a continued rotation into cyclical stocks.
Traders said the mergers and acquisition activity also helped after Faurecia started talks to buy the automotive unit of French drone specialist Parrot.
Europe's auto sector index has fallen 10 percent so far this year. By 1507 GMT it was up 3 percent to its highest level since January 13. Faurecia rose 5.2 percent, while shares in big car makers such as Daimler, BMW and Volkswagen were all up more than 3 percent. (Reporting by Danilo Masoni; Editing by Vikram Subhedar)