- US makes headway on debt ceiling
- UK inflation holds steady
- German investor confidence rises
FTSE 100: 0.77%
CAC 40: 0.52%
FTSE MIB: -0.09%
IBEX 35: 0.42%
Stoxx 600: 0.68%
Markets in Europe were lifted by news that the US government was close to clinching a deal on the debt ceiling.
The Democrat's Senate Majority Leader Harry Reid yesterday said he made "tremendous progress" on talks with his Republican counterpart, Mitch McConnell, hinting that an agreement could be reached as soon as today.
The US is two days from reaching its $16.7trn borrowing limit after which it will start to run out of cash to pay its bills and face a possible default.
The proposed plan under discussion would end the partial government shutdown and increase the debt ceiling by enough to cover the nation's borrowing needs at least through mid-February 2014.
"The dark clouds that were hanging over Washington are starting to pass as negotiations between the Democrats and Republicans improve," market analyst IG said.
"The fear of a US default has left some investors paralysed, but the progress that has been made could pave the way for a deal and that sentiment is driving stocks higher."
The government has been in partial shutdown since October 1st after Congress failed to agree on a budget deal on time.
UK inflation unchanged, German confidence rises
The UK inflation rate remained unchanged in September as a fall in both petrol and diesel prices was offset by rising air fares, the Office for National Statistics revealed.
The consumer price index (CPI) came in at 2.7% last month, compared to forecasts for a drop to 2.6%.
The Bank of England is targeting an inflation rate of 2% but is putting off lifting interest rates to control inflation until the unemployment rate falls.
"We expect CPI inflation to drift slowly downwards to the 2% target, making it increasingly unlikely that either of the price stability knock-outs under the Monetary Policy Committee's forward guidance policy will be triggered," Barclays said.
In Germany, economic sentiment rose unexpectedly in October to the highest level since April 2010, according to a ZEW survey.
The investor confidence index climbed to 52.8 points this month from 49.6 last month, beating forecasts for the reading to remain unchanged.
The report comes as the Angela Merkel holds talks to form a coalition after failing to win enough votes at last month's federal election.
Rio Tinto, Burberry
Rio Tinto gained after reporting a 1% year-on-year increase in third quarter iron ore output to 53.4m metric tonnes.
Burberry declined after announcing Chief Executive Officer Angela Ahrendts will leave to join Apple next year.
Ashtead rallied after JP Morgan raised its rating on the shares
to 'overweight' from 'neutral', citing a prediction for an increase in earnings in fiscal year 2016.
Schindler Holding slumped after the Swiss elevator maker said operating profit fell 5.7% to 682m francs in the nine months through September from a year earlier and cut its forecast for the year.
Man Group advanced after UBS added the hedge-fund manager to its most-preferred list on the back of strong performance of its GLG Partners unit.
Other asset classes slide
The euro fell 0.42% to $1.3504.
Brent crude futures slipped $0.662 to $110.310 per barrel on the ICE.