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European stocks rose on Monday, with gains in telecoms and banks offsetting a big fall in Unilever, while the dollar dipped as uncertainty over politics and the timing of a U.S. interest rate rise kept investors nervous.

U.S. markets were closed for the Presidents Day holiday, and this restricted activity in Europe and Asia.

Unilever (ULVR.L) shares fell nearly 9 percent at one point after U.S. food company Kraft Heinz Co (KHC.O) withdrew on Sunday a proposal for a merger with its larger rival. The Anglo-Dutch group’s shares were last down 6.6 percent.

Kraft felt it was too difficult to negotiate a deal after its bid was disclosed so soon after its approach to Unilever, according to people familiar with the matter.

However, the slide in Unilever shares could not prevent the pan-European STOXX 600 index from rising 0.1 percent to just below a 14-month high touched last week.

A 3.3 percent gain in Deutsche Telekom (DTEGn.DE) helped push the index higher after a Reuters report that Japan’s SoftBank (9984.T) is prepared to give up control of Sprint (S.N) to Deutsche Telekom’s T-Mobile US (TMUS.O) to clinch a merger of the two U.S. wireless carriers.

Royal Bank of Scotland was also a winner on the day as shareholders welcomed a plan to scrap the proposed sale of its Williams & Glyn unit.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS edged up 0.2 percent and back toward a 19-month peak reached last week.

Japan’s Nikkei .N225 rose 0.1 percent while China’s blue-chip CSI 300 index .CSI300 closed up 1.5 percent, its biggest gain in six months, after media reports on Friday that pension money may begin flowing into the market as soon as this week.

The dollar dipped 0.1 percent against a basket of major currencies .DXY after U.S. bond yields fell on Friday.

The euro EUR= rose 0.1 percent to $1.0623 while the yen fell 0.2 percent to 113.11 per dollar JPY=. Sterling GBP=D4 rose 0.5 percent to $1.2465.

POLITICS

The focus in euro zone debt markets was on politics. French 10-year government bond yields FR10YT=TWEB rose after an opinion poll published on Monday showed far-right candidate Marine Len Pen narrowing her centrist and center-right rivals’ lead in the final round of the presidential election in May.

This pushed the gap over benchmark German 10-year yields DE10YT=TWEB to 84 basis points, its widest since late 2012.

Yields on safe-haven two-year German bonds DE2YT=TWEB hit a record low, at minus 0.85 percent.

“It all seems to be driven by the move in French bonds after a poll that showed Le Pen’s improving fortunes in the second round of voting,” Rabobank strategist Lyn Graham-Taylor said.

The dollar hit its highest against the basket for more than a month last week after U.S. Federal Reserve Chair Janet Yellen said it would be unwise to delay raising interest rates, before pulling back on uncertainty over President Donald Trump’s policies, particularly on trade.

Minutes of the Fed’s latest policy meeting on Wednesday will be parsed for any clues to the timing of the next hike, and Fed officials speak at five events this week.

Cleveland Fed President Loreta Mester said in Singapore on Monday she would be comfortable raising rates if the economy maintained its current performance.

Among commodities, oil rose, although an increase in the number of U.S. drilling rigs dragged on the price. Brent crude LCOc1 rose 38 cents a barrel to $56.19.

Copper rose on supply worries after the world’s second-biggest copper mine said it could not deliver promised shipments due to export permit problems. Three-month copper on the London Metal Exchange was last up 0.7 percent at $6,004 a tonne,

Gold XAU= edged up 0.2 percent to $1,237 an ounce.

 

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