European shares at two-week high

The pan-European STOXX 600 index rose 0.6% to 647.07 points, its highest close since July 6

European shares ended at a two-week high on ​Wednesday, driven by energy and defence stocks, while Randstad soared in its strongest day since 2008 ‌after the world’s largest staffing company topped quarterly revenue expectations.

The Netherlands-based Randstad rose almost 14% to the top of the pan-European STOXX 600 index after signalling a rebound in demand across key markets.

The index rose 0.6% to 647.07 points, its highest close since July 6.

Most sectors inched higher. ​Aerospace and defence stocks led sectoral gains, up 2.6%. The energy index firmed 0.8% as Brent crude ​prices broke above $93 a barrel, their highest in six weeks, after tankers carrying Saudi oil to Asia ⁠turned back from the Red Sea following threats from Yemen’s Houthis.

The re-escalation in the Middle East war has brought ​inflation concerns back to the forefront, and dimmed the appeal of European stocks given the region’s heavy reliance on fuel ​imports.

Tech stocks on the STOXX 600 slipped 0.5% ahead of quarterly results from tech companies. The results will be watched for clues on whether the rally in AI-related stocks still has room to run.

The sector has seen notable swings recently as ​investors balance AI-led growth against increasingly stretched valuations, particularly among chip stocks, which have posted an eye-popping rally this ​year in Asian and U.S. markets.

A rotation away from tech has resulted in a better day for European markets overall, which ‌continue ⁠to defy the strength in oil, said Chris Beauchamp, chief market analyst at investing platform IG.

The European Central Bank is widely expected to hold interest rates steady on Thursday, even ​with this latest rise in ​oil prices. But at ⁠least one 25-basis-point increase is priced into markets by the end of the year, along with a roughly 60% chance of a second one, according to LSEG-compiled data.