Greek optimism pushes Europe stocks higher

Reuters A petrol bomb explodes near riot police during an anti-austerity demonstration in Athens.

LONDON (MarketWatch) � European stock markets ended higher Monday after the Greek government approved unpopular austerity measures, with gains supported by mining and pharmaceutical stocks.

The Stoxx Europe 600 index XX:SXXP �added 0.7% to finish at 263.17.

Posting the biggest jump in the Stoxx 600, shares of Cable & Wireless Worldwide PLC UK:CW �surged almost 45% after Vodafone Group PLC UK:VOD �VOD �said it was contemplating an offer for the telecom-services provider. Shares of Vodafone rose 1%.

Click to Play Greek police dodge petrol bombs and stones

Police dodged petrol bombs and stones as rage over a new austerity deal exploded in Athens over the weekend. (Video: Reuters/Photo: Getty Images)

Markets were buoyed by optimism surrounding Greece after the debt-laden country early Monday morning in Athens ratified an austerity plan required to receive another 130 billion euros ($172 billion) of aid. Euro-zone finance ministers last week held off on approving the bailout, saying they needed concrete signs that Greece was trying to implement cost-cutting measures. Greek Parliament votes

Euro-zone finance ministers are seen as likely to approve the package when they meet again on Wednesday.

The Athens General Index GR:GD �jumped 4.7% to 834.41, outperforming the rest of the European indexes. Shares of National Bank of Greece SA NBG �jumped 9%.

The stock market rally is, however, unlikely to continue, according to Atif Latif, director of trading at Guardian Stockbrokers.

�The feel-good rally seems to be approaching the end, with sector rotation and defensive portfolio positioning, coupled with downside protection being bought,� Latif said in emailed comments.

In the U.S., stocks started the week higher and most Asian stock markets closed with gains.

FTSE 100 outperforms

Away from Greece, the FTSE 100 UK:UKX �was one of the biggest gainers among regional indexes. Helped by exposure to the rising bank, pharmaceutical and resource sectors, the index advanced 0.9% to 5,905.70. HSBC Holdings PLC HBC �UK:HSBA and Barclays PLC UK:BARC �each rose 1.2%.

Among resource stocks, Anglo American PLC UK:AAL climbed 2.6%, Antofagasta PLC UK:ANTO �added 1.9%, Rio Tinto PLC UK:RIO �RIO �rose 2% and BP PLC UK:BP BP �increased 1.2%.

Drug makers rose across the board on Monday. In London, GlaxoSmithKline PLC UK:GSK �GSK �rose 1.6% and AstraZeneca PLC UK:AZN �took on 1.1%. Outside of London, Stoxx 600 heavyweight Novo Nordisk AS DK:NOVOB �added 2%, Novartis AG CH:NOVN �climbed 1.1% and Roche Holding AG CH:ROG �gained 1.2%

Also up, Bayer AG DE:BAYN , rose 1.5%, helping lift the DAX 30 index DX:DAX �0.7% to 6,738.47.

�We have seen a small move into defensives after the Greek news. The buying in pharma is due to some activity on the provision that the recent sell off was overdone,� said Latif.

Auto makers also helped drive the DAX higher. Shares of Volkswagen AG DE:VOW rose 2.1% after it said global sales of light commercial vehicles rose 10.5% in January year-on-year, a new monthly sales record for the unit. That inspired gains for other auto makers, with Daimler AG DE:DAI �up 1.5% and BMW AG DE:BMW up 1%.

Paring earlier gains, the French CAC 40 index FR:PX1 �ended 0.3% higher at 3,384.55. The index was weighed down by the nation�s banks. Shares of Societe Generale SA FR:GLE �were down 2.2%, Credit Agricole SA FR:ACA �lost 3.6% and BNP Paribas SA FR:BNP �closed 2.1% lower.

French and Belgian market regulators on Monday each said they had lifted bans on short sales of financial stocks that had been imposed in August. France, Belgium lift short-selling bans

Also falling in Paris, Alcatel-Lucent FR:ALU �lost 1.9%, after rising 12.1% on Friday. The telecom-equipment maker was downgraded to sell from hold by Societe Generale, which cited cash-flow issues and dimmer prospects for the sector in 2012.

Helping keep the French index in positive territory, oil group Total SA FR:FP , gained 1.1%. On Friday, the group reported a 12.8% rise in fourth-quarter profit and said that 2012 got off to a favorable start for upstream and refining margins.

The French index was also buoyed by Electricite de France SA FR:EDF , up 2.7%, as it reached a long-term uranium-supply agreement with Areva SA FR:AREVA ,�which was announced late Friday. Shares of Areva rose 4.1%.