A clutch of upbeat earnings and reports of progress in treatment for the fast-spreading coronavirus helped to push European shares towards record highs on Wednesday. Drugmaker Novo Nordisk rose 4.6% and industrial company Valmet and chipmaker Infineon both surged more than 10% after results, taking the pan-European stock benchmark STOXX 600 index up 1.2% in its third day of gains.

The index is now just 0.3% shy of record highs hit last month. The rally this week comes after a virus outbreak in China sent markets into a tailspin as investors gauged the potential economic damage from production and supply disruptions.

On Wednesday, reports from China and the UK that researchers are closing in on a vaccine to treat the virus, lifted sentiment as the death toll in China moved closer to 500.

China-exposed sectors such as autos, technology and basic materials were among the strongest performers.

"It is driven by what we see around the coronavirus and more importantly, the reporting season so far has been pretty reasonable across a number of different sectors," said Will James, deputy head of European equities at Aberdeen Standard Investments.

Companies listed on the STOXX 600 are forecast to report 1.2% earnings growth in the fourth quarter, just a touch below the 1.3% growth rate expected last week, according to the latest data from I/B/E/S Refinitiv. This would follow three straight quarters of declining profits.

Data showing an acceleration of euro zone business activity in January, added to the upbeat mood.

But tempering the positive expectations was a near 7% drop in cigarette maker Imperial Brands Plc after it forecast a fall in its first-half profit, while GlaxoSmithKline slipped after missing fourth-quarter earnings forecasts.

Planemaker Airbus fell after the company said it was prolonging a planned closure of its final assembly plant in Tianjin, China, as a result of the coronavirus emergency.