- US debt ceiling deal appears closer
- UK inflation report
- German sentiment figures
FTSE 100: 0.59%
CAC 40: 0.27%
FTSE MIB: 0.18%
IBEX 35: 0.16%
Stoxx 600: 0.50%
European stocks bounced back on hopes that the US government will soon strike a deal on the debt ceiling.
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.
Congress showed signs yesterday of making headway on an agreement after the Democrat's Senate Majority Leader Harry Reid said he made "tremendous progress" on talks with his Republican counterpart, Mitch McConnell.
"We hope that with good fortune [...] that perhaps tomorrow will be a bright day," Reid said, hinting that a deal could be reached today.
The proposal would end the partial government shutdown, which started on October 1st after Congress failed to agree on a budget deal on time.
The plan would also increase the debt ceiling by enough to cover the nation's borrowing needs at least through mid-February 2014, sources told Reuters.
"This is the first clear sign we've had that a deal may be close. That said, based on the size of the gains seen in the stock market, what we're actually seeing is a case of cautious optimism," according to Craig Erlam, Market Analyst at Alpari.
"Investors are clearly still concerned that negotiations can collapse which, would be disastrous so close to the deadline. This lack of faith highlights the trust that has been lost in the government, not just among the public but also in the financial markets."
UK inflation to fall
Britain's inflation is expected to fall in September to 2.6% from the prior month's 2.7% when the consumer price index figures are released today.
A reduction in the inflation rate will help close the gap between the rise in the cost of living and the lack of increase in people's incomes.
It could also help ease fears that the Bank of England's low interest rates will be jeopardised by high inflation.
The central bank's commitment to low rates is dependent on inflation expectations remaining below 2.5%.
"When inflation is currently significantly higher than this, it's difficult to gain comfort from this commitment," Erlam said.
"Those fears should now subside somewhat, especially if inflation continues in the same direction."
In Germany, the ZEW survey of economic sentiment is forecast to show a reading of 49.6 in October, the same level as the previous month.
It comes as the Angela Merkel kicks off talks to form a coalition in order to end a hung parliament 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.
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.