European shares close at record high after upbeat earnings; US-Ukraine deal in focus

By Nikhil Sharma and Purvi Agarwal

(Reuters) - European shares closed at a record high on Wednesday as corporate earnings took centre stage and investors assessed the impact of a critical minerals agreement between the U.S. and Ukraine.

The pan-European STOXX 600 index was up 1%, boosted by banks for a second consecutive session.

Insurers followed with a 2.4% gain after Germany's Munich Re posted an annual operating profit that beat estimates.

Upbeat results from brickmaker Wienerberger's helped lift its stock by 11.3%, and boosted the construction and materials sector by 1.9%.

Most sub-sectors on the STOXX closed higher, while media stocks led declines, falling 2.5%. Dutch information services firm Wolters Kluwer dropped 10.9% after announcing the retirement of its top boss Nancy McKinstry.

Meanwhile, the U.S. and Ukraine agreed on the terms of a draft minerals deal, ahead of more talks between Russia and the U.S. on Thursday in Turkey.

"Trump is creating a lot of uncertainty with tariffs and the politics he is doing. So people are just trying to position and be invested on the right side if a trade war should come," said Jochen Stanzl, chief market analyst at CMC Markets.

Stanzl said Wall Street was priced to perfection and the valuation gap made European stocks attractive.

Germany's mid-cap stocks hit their highest level in over six months, boosted by optimism around pro-growth policies and higher defence spending from the next government likely to be led by Friedrich Merz's conservatives.

The European aerospace and defence index was up 1.5%.

A Reuters poll found that a growing number of investors and strategists expect a correction in their local European stock market over the coming three months, before the region's equities start rising again and hitting new highs in 2026.

Reuters reported that the European Central Bank is poised to give Italy's UniCredit the green light to build up its stake in German rival Commerzbank. Shares in the companies were up 3.1% and 1.6% respectively.

Anheuser-Busch InBev (AB InBev) jumped 8.9% after it reported fourth-quarter operating profit above analysts' forecasts.

Stellantis fell 4.1% after the automaker issued a cautious outlook for 2025 after its annual results took a hit.

Nutrition supplement maker Glanbia sank to the bottom of the STOXX with a 23% plunge after announcing plans to sell its U.S. weight management brand SlimFast.

All eyes are on AI bellwether Nvidia's quarterly earnings after U.S. markets close as the result could prove to be a turning point for artificial intelligence stocks.

(Reporting by Nikhil Sharma and Purvi Agarwal; Editing by Rashmi Aich and Mark Heinrich)