Alstom shares gained up to 6.7% on Monday, reaching their highest level since October, after the company announced the sale of its conventional rail signaling business in North America to German brake manufacturer Knorr-Bremse.

Alstom had announced on Friday that it had reached an agreement with Knorr-Bremse for a purchase price of around 630 million euros.

Alstom shares were up 1.49% at 15.33 euros at 08:07 GMT, having climbed as much as 6.7% at the start of the session. Knorr-Bremse shares were up 4.04% at the same time.

"We have reduced our earnings per share estimates by 2%, but the transaction marks an important step in the implementation of the group's €2 billion deleveraging program, which is expected to be further detailed on May 8," commented Deutsche Bank in a note.

JP Morgan sees the sale as positive for the stock, and expects it to have a dilutive effect of around 20 basis points on margins.

(Reported by Clément Martinot, written by Nathan Vifflin, edited by Kate Entringer)