By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) -- European stock markets pushed higher in early trading on Monday, with drug stocks and banks providing support, and Italian stocks in the lead as a new government settled in. Earnings news drove Rentokil Initial PLC higher and Aker Solutions ASA lower.

The Stoxx Europe 600 index rose 0.3% to 296.68, after closing up 3.7% last week, the biggest percentage gain since November 23, 2012. The index has been up two of the past three weeks.

Markets have been moving higher on expectations the European Central Bank will cut interest rates later this week. The U.S. Federal Open Market Committee also meets, though economists largely expect no change in policy.

Earnings news was triggering action for some shares on Monday, with Aberdeen Asset Management PLC up 7% after the fund manager posted a half-year rise in pretax profits and assets under management. Aberdeen also said it remains cautious on its outlook.

Rentokil Initial PLC shares jumped over 5% after the company said first-quarter pretax profit fell 12%, but also announced the sale of its City Link business for 1 billion pounds to focus on its key pest, hygiene and workwear businesses.

On the downside, Aker Solutions ASA shares slumped nearly 20% after the oilfield products and services group released early its first-quarter results, saying earnings would "considerably lag current consensus market estimates," owing to cost overruns.

Shares of Balfour Beatty PLC fell over 11% after the international infrastructure group said its U.K. construction unit is expected to deliver "significantly lower profits from operations for 2013" than management had expected in March.

Italian stocks were bid higher on Monday, with the FTSE MIB Italy index up 1.5% to 16,809.91, led by a more than 2% rise for UniCredit SpA. . Italian Prime Minister Enrico Letta was sworn in on Sunday after a lengthy political deadlock.

Among other indices, the French CAC 40 index gained nearly 1% to 3,846.90, led by a 1% rise for heavyweight Sanofi SA (SNY) up 1% and a 1.4% rise for BNP Paribas SA .

The German DAX 30 index rose 0.6% to 7,859.09 and the FTSE 100 index was flat at 6,430.38.

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