By Johann M Cherian and Nikhil Sharma
(Reuters) - European shares closed at a record high on Thursday, as investors cheered upbeat earnings from German industrial giant Siemens (ETR:SIEGn), while sentiment was also buoyed by signs that Russia's nearly three-year-long conflict with Ukraine could end soon.
The pan-European STOXX 600 index was up 1%, while mid-cap stocks rose 1.1% to touch their highest since January 2022.
Benchmark indexes of Germany rose 2%, France added 1.5% and Italy advanced 1%.
Siemens, often viewed as a proxy for the health of the broader industrial economy, advanced 7.2% after its first quarter beat estimates, and it highlighted signs of recovering demand from customers in sectors like electronics and semiconductors.
The industrial giant had struggled in China in previous quarters, as orders plunged mainly due to destocking.
"Everybody was waiting for the destocking process to end because they've got large inventories and are now seeing positive orders coming in," said Jochen Stanzl, chief market analyst at CMC Markets (LON:CMCX).
"It is not major growth, but that is the first sign of an economic recovery and that is also driving the car companies up."
Auto stocks led sectoral gains on the STOXX 600 with a 4.4% jump - its biggest one-day rise in a year, also aided by a 4.9% jump in Michelin (EPA:MICP) after the French tyre maker posted better-than-expected full-year results.
Further, Swiss stocks gained 1.8%, with Nestle (NSE:NEST) leading with a 6.2% jump after the Nescafe coffee maker reported better-than-expected annual sales growth.
Markets also took comfort from signs that a peace deal between Russia and Ukraine might be nearing, although Kyiv and its European allies feared that they would be excluded from any peace negotiations.
Defence stocks added 1% as investors priced in the likelihood of increased defence spending in Europe.
Focus was also on Trump's plans to unveil reciprocal tariffs at 1800 GMT, against which European officials have vowed to respond.
Still, the STOXX index has gained 9% so far in the first quarter on expectations that U.S. tariffs could result in the European Central Bank increasing its pace of interest rate cuts and that a weak euro could bode well for export-oriented companies.
Among others, Embracer slid 11.2% after Swedish games developer missed third-quarter operating profit.
Meanwhile, Dutch payments company Adyen (AS:ADYEN) and German online takeaway food company Delivery Hero (DE:DHER) jumped 14.4% and 12.7%, respectively, after reporting strong earnings.
(This story has been refiled to say 'closes,' not 'close,' in the headline)