MILAN, March 12 (Reuters) - European shares rose in earlytrading on Monday to their highest in almost two weeks, boostedby gains among German utilities after the sector's leadingplayers announced a major overhaul of the industry.
Innogy soared 16 percent after parent RWEand rival E.ON said they would break up Germany'slargest energy company by market value and divide up its assets.
The deal would give E.ON greater economies of scale in powerdistribution and retail and RWE in renewables, making it easierfor them to cope with Germany's rapid shift to cleaner energysources. RWE and E.ON, whose share prices collapsed over thepast decade, rose 11 and 4.6 percent respectively.
Shares in utilities in other countries rose on optimism forfurther M&A in the sector.
The Stoxx utility index rose more than 2 percent to leadsectoral gainers in Europe, helping the pan-European STOXX 600index rise by 0.4 percent by 0812 GMT to its highestsince Feb. 28.
Germany's DAX was up 0.8 percent, while the UK'sFTSE rose 0.6 percent.
Among top gainers were GKN, after Melroseincreased its hostile bid for the UK automotive engineer,appealing to investors after the company struck a rival deal ofits own last week.
The autos sector index rose 0.7 percent, brushingoff a tweet by U.S. President Donald Trump in which hethreatened to impose taxes on European autos imported into theU.S. if the EU retaliates in a row over steel tariffs.
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The top faller on the Stoxx was Just Eat , down 5.1percent, following a downgrade to "sell" from Deutsche Bank.(Reporting by Danilo Masoniediting by Tom Pfeiffer)