European shares touch 4-month highs

European equities touched fresh four-month highs on Monday, with investors shifting into financials from the more defensive drug makers and food producers after the European Central Bank (ECB) opened the way for measures to fight the euro zone debt crisis.

ECB President Mario Draghi last week laid out plans to buy bonds to lower borrowing costs for Spain and Italy. Although the plan was heavily conditional and markets were originally disappointed by the lack of immediate intervention, the prospect of eventual action has since helped drive down sovereign bond yields and boost risk appetite.

"He put enough in place to tide the market over for the next few months. He said he would be introducing more information over the next few weeks... so you can easily get caught offside by making the wrong decision," said Kevin Lilley, European equities fund manager at Old Mutual Asset Managers.

Read more: European shares touch 4-month highs | Fin24