By Shreyashi Sanyal and Ankika Biswas
(Reuters) -European shares hit an eight-week closing high on Tuesday as investors hoped for a market-friendly outcome from the U.S. midterm elections, while Danish jewellery maker Pandora (OTC:PANDY) jumped on reporting better-than-expected quarterly sales.
The STOXX 600 index closed up 0.8% after moving in a narrow range for most of the day, with technology and retail sectors at the forefront of buying.
Pandora zoomed up 10.6% to top the benchmark index after the company highlighted resilient shopper demand even amid soaring living costs.
Wall Street's main indexes rallied as Americans voted in the midterm elections, with analysts expecting a Republican victory which would lead to a split government.
"Investors are expecting Republicans to at least win the House of Representatives, but very likely you will also get a majority in the Senate. Republicans are more pro-business than Democrats, so that could be what we are seeing today," said Teeuwe Mevissen, senior market economist at Rabobank.
Further, investors will also keep a close eye on U.S. consumer prices data for October to determine whether the Federal Reserve's aggressive tightening policy has helped bring down decades-high inflation.
Better-than-expected corporate earnings and hopes the Fed will deliver rate hikes in smaller increments have helped the STOXX 600 kick off November on solid ground.
Out of the 216 STOXX 600 companies, nearly 60% of them have reported better-than-expected earnings, compared to a typical quarter where 53% beat analyst estimates, according to Refinitiv data.
Meanwhile, two European Central Bank policymakers said the central bank would continue to raise borrowing costs even as the euro zone economy suffered because letting inflation stay high would be even more painful.
On the sectoral front, energy stocks were the only laggards, down 1.6%, as oil prices declined amid worries of a recession as well as slowing demand from worsening COVID-19 outbreaks in top crude importer China.
Shares of Adidas (OTC:ADDYY) jumped 4.4% as Bjorn Gulden, head of Puma, is set to take the helm from Jan. 1.
Munich Re gained 2.7% after posting a 44% rise in net profit in the third quarter, despite big claims from Hurricane Ian, and it "firmly" stuck to its full-year earnings target.