LONDON (TheDeal) -- European markets were higher in early morning trading as they rebounded from a five-session losing streak, buoyed by big-ticket deal news out of the U.K. and some strong results.
In London, the FTSE 100 rose 0.51% to 6538.86. Frankfurt's DAX climbed 0.42% to 11101.25. Paris's CAC 40 index was up 0.44% to 4949.06.
Shares in RSA Insurance (RSAIF) led the London market higher, climbing as much as 14% to just over 490 pence, after Zurich Insurance (ZURVY) confirmed rumors it is pondering a bid for its rival. The Swiss company could offer as much as £5.5 billion ($8.55 billion), or 550 pence per share, for RSA, according to the Financial Times.
Hikma Pharmaceuticals (HKMPY) agreed to buy the U.S. generic drug business of Germany's Boehringer Ingelheim for $2.65 billion in cash and stock. The acquisition of the unit, called Roxane Laboratories, will make Hikma the U.S.'s No. 6 generic drug maker. Hikma shares climbed 6.49% to 2,215 pence.
London-listed industrial investment group Melrose Industries (MLSPF) said it will sell its Elster utilities metering business to Honeywell International (HON - Get Report) for £3.3 billion and promised to return at least £2 billion of that cash to shareholders. Shares in Melrose were up almost 13% in early trading to 287.30 pence.
Luxury goods makers were France's top performers on Tuesday, with Kering (PPRUY) posting early gains of 6.7%, after its Gucci unit surprised the market with strong sales over the second quarter. LVMH Moet Hennessy Louis Vuitton (LVMUY) benefited from the tailwinds provided by Kering to climb almost 2%.
At the other end of the CAC 40, Cie. Generale des Etablissements Michelin (MGDDY), Europe's biggest tire maker, fell almost 6% after posting disappointing results and admitting that commercial agreements limited its ability to pass on falling raw material prices to consumers.
The day's most important macroeconomic news came out of the U.K., where growth accelerated in the second quarter, pushing GDP up an estimated 0.7%, compared to 0.4% over the first three months of the year. The increase means Britain's output is at the same level as in the first quarter of 2008, before the credit crisis, and will add to pressure for the Bank of England to consider a rate hike. BOE's head Mark Carney recently hinted an increase could come as early as the end of the year, six months earlier than the expected mid-2016 liftoff.
In the U.S., the Federal Reserve on Tuesday begins its two-day rate-setting meeting, though the markets will have to wait until Wednesday to hear a policy statement.
Chinese markets seesawed on Tuesday, caught between investors' fears of a repeat of Monday's crash, which erased more than 8% of the value of the major Chinese indices, and Beijing's insistence that it will stabilize share prices and support the economy.
The People's Bank of China said Tuesday it will inject 50 billion yuan ($8 billion) into the money markets, its biggest injection since the last selloff on July 7, while China Securities Financial, a state owned fund, will continue to buy shares.
China's Shanghai Composite Index dipped more than 5% in early trading before surging into positive territory and then sliding again to close at 3,663, down 1.7%. In Hong Kong, the Hang Seng proved more resilient, opening lower before quickly moving into the green, where it remained for the rest of the day, closing up 1.1% at 24,618.27.
Australian markets reflected the volatility in China, dipping sharply lower in early trading before recovering ground to leave the ASX 200 down 0.09% at 5,584.7. In Tokyo, the Nikkei 225 ended the day down 0.1% at 20,328.89 after spending much of the day well below that mark.