European Stocks Surge as Financial Sector Leads Gains

European stocks experienced gains on Tuesday with the STOXX 600 index increasing by 0.6%. The rise was driven by strong performances in the financial and banking sectors as markets anticipated a significant rate cut by the U.S. Federal Reserve. Key economic data and ECB speeches were also in focus.

European stocks climbed on Tuesday, bolstered by the financial sector, as markets approached the anticipated onset of the U.S. Federal Reserve's monetary easing cycle, which could result in a substantial rate cut.

The STOXX 600 index rose by 0.6% to reach 518.16 points as of 0713 GMT, while the UK's FTSE 100 outshone other European indices with a 0.7% increase. Gains were broad-based, with financials and banking shares leading the way, up nearly 1% and 0.8%, respectively.

All eyes are on the Federal Reserve's decision set for Wednesday, with a 67% probability of a 50 basis points rate cut. Investors are also concentrating on key economic reports, including a German sentiment survey and U.S. retail sales data. In the meantime, ECB supervisors Claudia Buch, Elizabeth McCaul, and Frank Elderson are scheduled to speak. Among individual stocks, Kingfisher and Barry Callebaut saw significant gains following positive updates and ratings adjustments.

(With inputs from agencies.)