MILAN: European stocks rallied on Wednesday as a billion-dollar takeover offer for Swiss firm Sunrise Communications boosted the telecom sector and investors looked past a collapse in Britain's quarterly economic output to bet on a stimulus-driven recovery.

The pan-European STOXX 600 closed 1.1% higher, marking its fourth consecutive day of gains and settled near a three-week high. Wall Street's benchmark S&P 500 headed for a record high boosted by technology stocks.

Sunrise Communications surged 26.8% to a record high after US firm Liberty Global launched a takeover offer for the company in a deal valued at 6.8 billion Swiss francs ($7.40 billion). Shares in German telecoms investor Freenet, Sunrise's largest shareholder, jumped 16.8%, while the broader sector gained 1.7% to lead sectoral gains.

Meanwhile, London's FTSE 100 jumped 2% as investors focused on signs of a recovery in economic output in June, shrugging off a record 20.4% plunge in the second quarter, the largest contraction reported by any major economy.

European food-ordering firm Just Eat Takeaway.com NV rose 3.2% after reporting higher revenue and underlying profit for the first half of 2020.

British online fashion retailer ASOS jumped 13.3% as it forecast full-year sales and profit significantly ahead of market expectations.