US President Donald Trump's decision to delay an increase in tariffs on Chinese goods drove European shares to their highest since October as carmakers and mining companies rallied.
The pan-European STOXX 600 was up 0.3 percent by 0930 GMT and Germany's trade-sensitive DAX rose 0.5 percent. The STOXX hit 373.18 in early deals, its highest since Oct. 10.
Trump said on Sunday he would delay the March 1 deadline for a tariff increase after "productive" trade talks and that he and Chinese President Xi Jinping would meet to seal an agreement if progress continued.
Auto shares jumped 1.6 percent to their highest since early November and basic-resources stocks rose 0.9 percent as the tariff reprieve triggered relief for companies most at risk from slower global trade.
Car-parts makers Valeo and Faurecia were among the top performers, up 2.6 to 3.4 percent. Steel companies Arcelormittal and Norsk Hydro and commodity trader Glencore all rose more than 2 percent.
Investors stayed cautious, though.
"I believe the easiest part is done," said Stephane Ekolo, fundamental analyst at Unigestion in Geneva. "I believe Mr Trump has oversold the positive aspects of the discussions ... the overall deal will be less impressive than what the Chinese and especially Mr Trump are saying about it."
Disappointing results drove some significant declines. Shares in Bank of Ireland dropped 7.5 percent after the bank cut its outlook for 2019 and reported a weaker fourth-quarter net interest margin (NIM).
"A weaker Q4 NIM and a lower outlook for 2019 weigh on near-term forecasts, while guided regulatory capital consumption is higher than anticipated," wrote Davy Research analysts.
Covestro shares fell 3.7 percent after the German chemicals group said its 2019 core earnings may fall as low as half of last year's level.
Overall, fourth-quarter earnings have been disappointing, and analysts have been steadily cutting their expectations for European earnings growth.
However, Italy's FTSE MIB outperformed the market, climbing 1 percent as government bonds jumped after Fitch affirmed the country's BBB credit rating.
Shares in banks, which have significant government bond holdings, jumped 2.3 percent.
M&A was also a driver: French healthcare company Ipsen fell 2 percent after agreeing to buy US peer Clementia Pharmaceuticals in a deal worth up to $1.31 billion.
PostNL surged 9.6 percent, set for its best day in more than two years, after saying it planned to buy its main rival Sandd for an estimated 130 million euros. Chipmaker AMS climbed 6.6 percent to the top of the STOXX after it introduced a new component for mobile 3D sensing applications.
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