European Shares Climb Amid Optimism Over Shutdown Resolution and Corporate Earnings

European shares reached a two-week high as optimism grew over the potential end of the U.S. government shutdown and mixed earnings forecasts from telecom firms like Vodafone and INWIT. Key sectors saw gains, but caution remains over the potential economic impact of the shutdown.

European shares surged to a two-week high on Tuesday, fueled by investor optimism around a possible resolution to the U.S. government shutdown, marking the longest in history, and mixed corporate forecasts from telecom heavyweights like Vodafone and INWIT. The STOXX 600 index climbed 0.7% by 0920 GMT, achieving its largest daily gain in six months on hopes of a resurgence in official data releases post-shutdown.

The U.S. Senate's approval of a deal to restore federal funding prompted speculation on the shutdown's impact on the U.S. economy. According to Richard Flax, Moneyfarm's CIO, there is concern about whether the lack of funding has contributed to a gradual economic slowdown. Investors also turned their attention to the corporate earnings season, with Vodafone's 4% rise bolstering the telecoms sector after upgrading its earnings forecast. Conversely, INWIT fell 8.4% following a lowered revenue forecast despite increased quarterly profits.

Market sentiment varied across regions, with Swiss stocks climbing on positive trade developments between the U.S. and Switzerland and the UK's FTSE 100 hitting record highs, buoyed by a weak pound and expectations of potential interest rate cuts. Additionally, Frankfurt Airport operator Fraport saw a 10.5% boost after reporting strong third-quarter earnings due to significant cost reductions.

(With inputs from agencies.)