European shares advance toward record highs on earnings momentum, midterm relief

European equities surged toward possible record highs on Thursday, riding a wave of relief-driven gains to edge close to their highest levels since August, as falling energy costs and strong earnings from the artificial intelligence sector helped overshadow concerns about rising interest rates in London and ongoing protests in Paris.

The pan-European STOXX 600 index has shown an impressive recovery, climbing back from its June troughs to put it in striking distance of record highs, powered by renewed confidence in the financial health of companies. This optimism reassured investors that demand and cash flow from businesses continue to be solid, even in the face of recent cost increases.

Meanwhile, Lloyd’s Bank analysts noted that while the energy shock is manageable at its present level, they remain unconvinced that demand conditions are robust enough to enable firms to pass on higher costs.