European shares steady as M&A optimism offsets French political turmoil

European shares were steady on Tuesday, as initial euphoria from a raft of merger deals in the region partially outweighed political uncertainty in France following Prime Minister Francois Bayrou's ouster in a no-confidence vote.

The pan-European STOXX 600 was up 0.1% at 552.69 points, as of 0707 GMT, with basic resources leading sector gains with a 1.3% jump.

France's CAC 40 index edged 0.2% higher in early trading, while its longer-dated bonds were flat as markets braced for President Emmanuel Macron's choice for what would be the country's fifth prime minister in under two years.

Recent French governments have struggled to unify over plans to tame the budget deficit at a time when global investors are fretting over ballooning government debt in developed economies.

Market reactions on Monday were, however, contained as Bayrou's downfall was largely expected.

Shares of Anglo American jumped 4.7% after the miner said it has agreed to merge with Canada's Teck Resources in a $50 billion deal to form a newly combined company Anglo Teck Plc.

In Italy, shares of Monte dei Paschi di Siena gained 3.8% after data showed that the lender secured 62% of bid target Mediobanca. Mediobanca's shares climbed 3.7%.  

(Reporting by Tristan Veyet in Gdansk, Johann M Cherian in Bengaluru; Editing by Sherry Jacob-Phillips)