ROTTERDAM/LONDON: European stocks rose on Tuesday as German carmaker Volkswagen and online fashion retailer Zalando jumped following upbeat earnings forecasts, while investors awaited the US Federal Reserve’s views on a recent pick-up in inflation.

The pan-European STOXX 600 index rose 0.5%, inching closer to a record peak set last year and tracking an overnight rally on Wall Street on optimism about an eventual economic recovery from the pandemic lows.

Volkswagen AG jumped 4.9% after the world’s second-largest carmaker said it was confident that cost cuts will help improve profit margins in the coming years, boosting European automakers.

Zalando rose 4.1% after it forecast 2021 revenue growth above market expectations following a strong start to the year. Its shares touched a three-week high and lifted the wider retail index.

A gauge of volatility in European stock markets slipped to its lowest level since February 2020.

Investors are focused on the Fed’s two-day policy meeting, which will end on Wednesday amid concerns that a potential spike in inflation as economies recover could prompt the central bank to tighten monetary policy sooner than expected.

French telecoms operator Iliad SA jumped almost 5%after saying it aimed to turn a core profit for its Italian business in the second half of this year.

German biotech firm Morphosys slumped 8.9% to the bottom of STOXX 600 after forecasting a fall in 2021 revenue.