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* Nordic Semiconductor jumps on M&A report
* Trainline slumps to bottom of STOXX 600
* Tech stocks lead sectoral gains
(Adds comments, updates prices throughout)
By Sruthi Shankar and Shreyashi Sanyal
May 20 (Reuters) - European stocks rose on Thursday after
one of the worst selloffs this year as strong earnings and
merger talks in the chip sector helped investors look past
inflation worries.
The pan-European STOXX 600 index rose 1.3% after
suffering a 1.5% loss in the previous session. Tech stocks
gained 2.7% to lead sectoral gains.
Oslo-listed chipmaker Nordic Semiconductor jumped
9.8% to the top of STOXX 600 after an Italian daily reported
that Franco-Italian rival STMicroelectronics
is mulling an offer to buy the company.
But, Nordic Semiconductor's chief financial officer said the
firm had "no knowledge" of any takeover interest from
STMicroelectronics.
A rally in economy-linked cyclical sectors on the back of
reopening optimism and solid earnings drove the STOXX 600 to
record high earlier this month, but inflation worries and a rise
in market volatility put the index on course for weekly losses.
"Given we're near a cyclical peak in the real economy and
confidence indicators, we want to put some defensive names in
order to hedge in what could be a more volatile phase in
markets," said Michele Morganti, Generali Investments' senior
equity strategist.
Wall Street's main indexes also rose after a three-day
slide, helped by gains in technology stocks, as the smallest
weekly jobless claims since the start of a pandemic-driven
recession bolstered risk appetite.
German producer prices posted their biggest increase in
nearly a decade, in a further sign that supply bottlenecks are
leading to increased inflation pressure in Europe's largest
economy.
However, Jack Allen-Reynolds, senior Europe economist at
Capital Economics said: "once the temporary forces pushing up
inflation fade, we expect it to drop back sharply to well below
the ECB's target."
In earnings, French conglomerate Bouygues edged up
0.3% after it raised the full-year guidance for its telecoms
division and reported a smaller than expected first-quarter core
loss.
Deutsche Telekom added 2.5% on raising its
medium-term core profit outlook.
Budget airline EasyJet fell 2.1% after it warned
that late announcement of travel rules reduced visibility as it
reported a wider half-year loss.
UK rail operator Trainline slumped 23.3%, marking
its worst day on record, with traders pointing to hit from a
reorganisation of Britain's railway system.
(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru;
Editing by Arun Koyyur and Andrew Heavens)
