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* STOXX Europe 600 index up 0.1 pct
* Temenos surges on broker upgrade
* Commodity shares in demand
By Atul Prakash and Kit Rees
LONDON, Sept 5 European shares edged higher to
an eight-month peak on Monday, building on the previous
session's rally, with Swiss software maker Temenos
leading the market upward after an upgrade by a leading
Temenos surged 7.6 percent, closing at a record high after
Credit Suisse raised its stance on the stock to "outperform"
from "neutral". Credit Suisse said it expected Temenos to
continue to surprise on the upside in the coming quarters,
including an increase of the 2016 guidance.
"But not only do we believe that the momentum is likely to
remain strong, we also have become more confident that Temenos
will be one of the few structural winners in the growing core
banking software market in the medium term," Credit Suisse
analysts said in a note.
Telecom company SFR gained 6 percent after rival
French telecoms group Altice said it planned to
simplify its ownership structure by exchanging its shares for
the outstanding 22.25 percent of shares of SFR that it does not
Altice shares were unchanged, with Bryan Garnier saying that
it retained its "buy" recommendation on Altice as the move was
likely to have a positive impact on the company's earnings per
share next year.
The pan-European STOXX 600 index was up 0.1 percent
at its close after setting its highest level since early January
and building on a 2 percent rise in the previous session, when
weaker-than-expected U.S. jobs data led investors to pare back
bets on an imminent U.S. interest rate hike.
Mike van Dulken, head of research at Accendo Markets, said
that investors were interpreting Friday's U.S. jobs data as
being inconclusive and insufficient to convince the Fed that
a rate hike is warranted this month.
"Traders clearly like the idea of cheap money for
longer, even if only for a few more months."
However, Monday's gains were clouded by a survey showing
euro zone business growth was at its weakest since the start of
last year in August, suggesting the bloc's already struggling
economy is losing what little momentum it had.
Among sectoral movers, the European oil and gas index
rose 1 percent as oil prices reversed losses after the
dollar lost its momentum. Shares in Royal Dutch Shell
increased 1.3 percent, while BP was up 0.9 percent.
However, the region's banking index fell 0.3
percent. It was pulled down by RBS and Lloyds,
which lost 3.5 percent and 2.1 percent respectively.
This came after Deutsche Bank cut its ratings on both the
stocks, saying it expected to see steady asset pricing pressure
on UK banks, with negative consequences for net interest income
(Reporting by Kit Rees; editing by Mark Heinrich)