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Paris - European shares pushed higher on Monday in holiday-thinned trading with shares in car manufacturers leading the way, despite a sharp drop in Tokyo as a surging yen hit exporters.
"European equities are trading mostly higher in afternoon action, though volume is lighter than usual with UK markets closed for a holiday," said market analysts at Charles Schwab.
Germany's DAX 30 climbed 1.1%, while France's CAC 40 rose 0.4% in afternoon trading.
"Automakers are moving higher to help buoy the markets, aided by upbeat comments from Fiat Chrysler Automobiles NV's Chairman (Sergio Marchionne) on the outlook for China," said a note from the brokerage house.
Fiat shares only got a 0.3% bump in Milan, but in Germany shares in Mercedes-maker Daimler gained 0.3%, VW rose 1.3% and BMW raced ahead 1.3%. In France, shares in Renault added 0.4%, while Peugeot slipped 0.1%.
"However, Italian banking stocks are hamstringing the financial sector after a disappointing banking stock initial public offering (IPO) in the nation," said Charles Schwab analysts.
Milan was down 0.4% in afternoon trading as investors were not seduced by an initial public offering by Banca Popolare di Vicenza.
That hit other banking shares, including sector leaders Unicredit, which fell by 6.4% and Intesa Sanpaolo, which slid 1.9%.
Despite Paris shares trading higher, a rise in the euro against the dollar was holding investors back, Philippe Cohen, of Barclays Bourse, said.
Wall Street stocks opened slightly higher on Monday at the kickoff of a week heavy with big US economic releases that includes April jobs and car sales data, with the Dow Jones Industrial Average rising 0.3%.
Tokyo stocks plunged more than 3% leading a sell-off across Asia, also in limited holiday trades, after the Bank of Japan surprised markets by opting on Thursday not to unleash fresh stimulus despite signs of faltering growth.
After Friday's public holiday in Japan, the Nikkei closed 3.1% lower on Monday, playing catch up with sharp losses on Wall Street on Friday.
"We expect short-term share market volatility to remain high," Shane Oliver, the Sydney-based head of investment strategy AMP Capital Investors, told Bloomberg News.
"Failure by the BoJ to do more soon risks unwinding all the progress on inflation expectations seen under Abenomics, particularly with the yen breaking to ever higher levels," he added, referring to Prime Minister Shinzo Abe's growth policy blitz.
The yen has soared against the dollar since the BoJ decision, which came soon after the US Federal Reserve indicated it was keeping its eye on market movements before hiking interest rates again.
And it remains elevated despite Japan Finance Minister Taro Aso trying to talk it down by hinting at possible intervention if its strength continues.
On Saturday he said the rally was "extremely worrying", adding that "speculative moves are seen behind it".
"Tokyo will continue watching the market trends carefully and take actions when necessary," he said.
The greenback bought ¥106.49 on Monday, well down from the levels above ¥111 before the BoJ's surprise announcement.
With the yen rallying, Japan's exporters were under pressure as it reduces the value of their overseas profits.
Troubled car parts maker Takata plunged 9.3% after reports in various media said more than 100 million vehicles equipped with air bags made by the company are likely to be subject to global recalls, up from the current 60 million.
The auto parts giant has been hammered by an exploding air bag defect blamed for at least 11 deaths.
