European stocks surged to two-year peaks on Wednesday, lifted by resilient company earnings and record highs set in Asia and New York, though a 6 per cent slump in Standard Chartered shares kept the banking sector under a cloud.

At 1000 GMT, the pan-European STOXX 600 rose 0.6 per cent to 397.43 points, a level last seen in August 2015.

Some of that was down to Germany's DAX index which, playing catch-up after Tuesday's holiday, jumped 1.3 per cent to hit a fresh record high.

Markets continued to brush off concerns over Catalonia's independence bid, pushing Spain's IBEX up 0.5 per cent.

The European benchmark is enjoying its fifth straight day of gains and rose almost 2 per cent in October, having also taken a cue from global markets which have been propelled higher by hopes of US tax cuts, economic recovery and a robust tech cycle.

“Economically everything looks good at the moment,” said Jonathan Bell, chief investment officer at Stanhope Capital.

Bell cautioned, however, that while investors were riding the rising wave, markets could be vulnerable to monetary policy changes.

The day's top performer was British drugmaker Indivior which soared 11.5 per cent after US authorities recommended approval for an opioid addiction drug. The stock has risen about 24 per cent already this week.

“On our view (the recommendation) substantially increases the probability of approval ... which is material given its importance to future growth prospects,” analysts at Jefferies told clients, rating the stock a Buy.

Fellow drugmaker, Denmark's Novo Nordisk , lost 2.8 per cent after publishing third-quarter results and warning that new legislation in some U.S. states could hurt business in its key market.

Still on the earnings front, forecast-beating third quarter results drove up shares in Finnish tyre maker Nokian Tyres by some 6 per cent, while British bookmaker Paddy Power jumped 4 per cent to three-month highs.

Of the STOXX600 firms which have reported third quarter results, almost half have beaten forecasts, according to Thomson Reuters I/B/E/S, which also predicts average earnings to increase 3.5 per cent over the same 2016 quarter.

But the latest earnings season has rekindled some worries for Europe's banking sector.

While BNP Paribas shares extended the previous day's 2.7 per cent fall due to disappointment in its fixed income trading operations, Standard Chartered was Wednesday's biggest loser, with its biggest daily fall in three months.

While the Asia-focused lender posted a 78 per cent rise in pre-tax profit, this was overshadowed by higher expenses and flat revenues, dashing investors' hopes for dividend payments. Shares in Austria's Raiffeisen bank also fell 2.1 per cent.

Also bringing up the bottom of the index was British clothing retailer Next which sank 6 per cent after results fell short of analysts' expectations

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