The DAX index, which includes shares of Germany’s 40 largest companies, closed up 0.7% after hitting 16,331.94 points earlier in the day.
Europe’s Stoxx 600 index rose 0.7% at the close, posting the highest level in more than a year, and stocks of financial institutions topped the gainers.
Talks on raising the US debt ceiling appeared to be moving forward, with Democratic negotiators saying they had made “steady progress” towards reaching a deal to avoid government default.
But the chief Republican negotiator later said talks had broken down and the White House said a deal was still possible.
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