European Stocks Surge as Financials Lead Gains Amid Fed Rate Cut Anticipation

European stocks climbed to a two-week high, driven by gains in the financial sector and a weaker dollar. The STOXX 600 rose 0.5%, led by Britain's FTSE 100, ahead of the U.S. Federal Reserve's anticipated rate cut. Market volatility remains due to central bank decisions and economic forecasts.

European stocks hit a two-week high on Tuesday, with financials providing significant support. As markets anticipate the U.S. Federal Reserve's monetary easing cycle, policymakers may deliver an outsized interest rate reduction.

The continent-wide STOXX 600 index increased by 0.5%, reaching 517.74 points. Britain's FTSE 100 outperformed its European peers with a 0.7% rise. All sectors were trading higher, notably basic resources, which gained nearly 1% as greenback-priced copper edged higher on a softer dollar and expectations of a U.S. rate cut.

Banks and travel shares also bolstered the markets, each rising by 0.8%. Investors are closely watching the Fed's upcoming decision, with a 67% chance of a 50 basis point rate cut. Senior economic strategist Yvan Mamalet commented on the market's volatility, attributing it to central bank decisions and political uncertainties.

(With inputs from agencies.)