European shares edged higher on Monday, moving back towards their highest level in nearly two years as sentiment towards riskier assets was buoyed by moves to break a budget impasse in the United States.
The pan-European FTSEurofirst 300 index rose 0.1 percent to 1,165.00 points, having reached a near two-year high of 1,170.29 points - its best level since early March 2011 - earlier this month.
The euro zone's blue-chip Euro STOXX 50 advanced by 0.2 percent to 2,715.96 points.
Traders cited optimism that the United States would reach a deal to raise its debt ceiling as a key factor, after the Republican party said it would seek to pass a three-month extension of federal borrowing authority next week.
“There's a bit of encouragement coming out of the US,” said Toby Campbell-Gray, head of trading at Tavira Securities in Monaco.
Share markets had remained resilient in the face of an uncertain economic outlook since many investors had stepped in to buy stocks on dips.
“Bad news is taken well and good news is taken even better,” said Campbell-Gray.
HUAWEI BOOSTS TECH STOCKS
The STOXX Europe 600 technology index was among the best-performing sectors, with traders citing higher profits from telecoms equipment maker Huawei Technologies as a driver.
Mirabaud Securities European equity research analyst Susan Anthony backed stocks in the sector such as SAP, which was up 0.7 percent, and Software AG, which gained 0.6 percent.
Danish industrial enzymes maker Novozymes also performed well, topping the FTSEurofirst 300 index's leaderboard with a 2.6 percent rise after it reported a bigger-than-expected rise in fourth quarter operating profits.
Shares in Swiss luxury goods group Richemont slumped 6 percent after the company issued a cautious outlook.
Traders said technical analysis charts pointed to a long-term bullish outlook for European shares.
The Euro STOXX 50 index has risen by more than 30 percent since mid-2012 after the European Central Bank pledged fresh measures to protect the euro from the effects of the region's sovereign debt crisis.
Returns on euro zone equities were 9.5 percent above the triple-A rated German government bond, while US shares offered a return 7.5 percent higher than the 10-year Treasury, Datastream data showed.
Banque Syz fund manager Armand Suchet expected more stock gains, highlighting banking shares.
“We believe there is still some upside on European markets,” said Suchet. - Reuters