European shares hit highest since August 2015, Ablynx soars

* STOXX 600 hits highest since Aug. 2015

* Optimism for M&A grows

* Dialog Semi sales beat guidance

* Micro Focus plummets as results miss expectations (Adds closing prices, comments)

By Danilo Masoni and Julien Ponthus

MILAN, Jan 8 (Reuters) - European shares hit their highest level in more than two years on Monday as confidence over global economic growth and mergers and acquisitions continued to boost investor appetite for stocks.

The STOXX 600 index closed up 0.3 percent at 398 points, a level last seen in August 2015.

Germany's DAX and Paris' CAC 40 both gained 0.4 percent, but a rise in the pound weighed on British dollar-earners and the FTSE fell 0.4 percent.

Belgian biotech group Ablynx (LSE: 0HNK.L - news) soared after the company rejected a 2.6 billion euro ($3.1 bln) bid from Danish drugmaker Novo Nordisk (LSE: 0QIU.L - news) . It closed up 45.3 percent, just above Novo Nordisk's offer price of 30.5 euros per share.

That level suggests Ablynx investors are ready to pay a light premium in the hope of a higher rival bid or a sweetened offer by Novo.

Optimism was palpable for M&A with brokers' research pointing to sectoral consolidation (such as security firms) and BNP Paribas (LSE: 0HB5.L - news) arguing the U.S. tax cuts would give a boost to deals without Europe missing out.

"As Europe is lagging in the cycle, its potential for external growth and share buybacks is at least as good as in the U.S.," the French bank said in a research note.

Shares (Berlin: DI6.BE - news) in payment processor Wirecard (IOB: 0O8X.IL - news) hit record highs, up 6.5 percent at 105.9 euros after the company signed new contracts and KBW's analysts lifted their target price to 114 euros.

The auto sector signed off a positive session up nearly 1 percent.

Italian-American automaker Fiat Chrysler rose about 1 percent after a note from Morgan Stanley (Xetra: 885836 - news) highlighted the potential of a spin-off of its Jeep brand.

"2018 is an extremely important year for Jeep from a product and strategic perspective, which we believe can gain investor attention and continue to unlock the discount on the stock," analysts at the U.S. brokerage said.

Elsewhere in the sector France's Renault (LSE: 0NQF.L - news) climbed 1.5 percent, while Germany's BMW (EUREX: BMWE.EX - news) , Daimler (Swiss: DAI-EUR.SW - news) and Volkswagen (IOB: 0P6N.IL - news) rose between 0.3 and 1.3 percent.

Micro Focus plummeted close to 17 percent, leading losers on the STOXX following its half-year results, which missed some analyst expectations.

The British firm that bought Hewlett Packard Enterprise's (HPE) software assets in an $8.8 billion deal said its revenue would fall 2-4 percent in the 12 months to October, after a disappointing sales performance in the acquired business in recent months.

Dialog Semiconductor (LSE: 0OLN.L - news) , recently hit by investor fears it could lose its top customer Apple (NasdaqGS: AAPL - news) , fell 0.8 percent after early gains in morning trading.

The chipmaker reported preliminary sales of $463 million for the fourth quarter, above the upper end of its outlook range announced in November.

"While the higher sales level is positive news, key for the investment case will be the business volume with Apple over the coming years," said Baader Helvea analysts. (Reporting by Danilo Masoni; Editing by Peter Graff and Susan Fenton)