PARIS: French stocks outperformed upbeat European indices on Monday following a convincing parliamentary majority for President Emmanuel Macron, while banks bounced following upgrades and the retail sector recovered from last week’s losses.

France’s blue-chips gained 1 percent after President Emmanuel Macron cemented an overwhelming parliamentary majority further increasing his party’s capacity to push through reforms.

Banks BNP Paribas, Societe Generale and Credit Agricole underpinned gains on the index.

“Markets are celebrating the fact the Macron government has been strengthened by this outcome,” said Vincent Juvyns, global market strategist at JP Morgan Asset Management.

“Planned reforms could enhance the growth potential of the country and reduce the structural deficit, something which would lift French GDP going forward,” he added.

Berenberg chief economist Holger Schmieding said France could become the strongest major economy in Europe in a decade.

He said this would outclass “a Germany that is resting on its laurels and a UK that is impairing its long-term growth prospects by losing (some of) its preferential access to its major market, the EU,” Schmieding said. Britain began negotiations on Monday on leaving the European Union.

Euro zone blue-chips rose 1 percent while the pan-European STOXX 600 rose 0.8 percent.

The retail sector, particularly grocers, which were sent into a tailspin on Friday after Amazon’s surprise $13.7 billion deal to buy Whole Foods, bounced back, partly on hopes of more deal activity in the sector.

The regional retail index, which suffered its worst week in 16 months last week, rose 0.8 percent. Britain’s Ocado

was up more than 6 percent, the top performing major stock across the region.

Exane upgraded Ocado to “outperform” on hopes that partnerships, if not a takeout, were more likely.

Analysts at the French broker said Amazon’s progress could be hemmed in short-term by the limitations of the store pick model - in which employees pick online orders from the store floor rather than in distribution centres.

“We’re minded to not overreact therefore, but the deal is still bad news for the sector, we think, unless of course you are a target,” they added. “Ocado might not be a target but the probability of a partnership just increased materially.”

Dutch healthcare technology firm Philips jumped to a 15-year high after The Times reported activist hedge fund Third Point was building a stake in the company.

Also, in notable broker activity, Credit Suisse found favour among analysts at Morgan Stanley, Citi and Deutsche Bank.

Citi named Credit Suisse its preferred Swiss bank, while Morgan Stanley reinstated coverage on the stock with an “outperform.” Credit Suisse shares rose more than 3 percent.

Mediaset Espana, meanwhile, fell 3.1 percent after Deutsche Bank cut it to a ‘sell’, saying a recovery in Spanish advertising looks to be over.

Formal Brexit negotiations got under way on Monday with Britain’s Brexit Secretary David Davis meeting EU chief negotiator Michel Barnier, though this did not ruffle market sentiment in the short-term.—Reuters