Europe close: Stocks edge up

European shares were up slightly with Germany's DAX outperforming, while shares in Swedish fashion giant H&M surged after profits smashed estimates.

The pan-European Stoxx 600 index edged up 0.13% to 511.75, just off the record high set on Tuesday. The DAX was up 0.50% at 18,477.09, down slightly from the new record 18,478 set in the morning.

"Sterling weakness has played a key role in the short-term move [in the FTSE 100], but in the longer-term it looks like we could see further gains as international fund flows continue to return to UK markets thanks to the better outlook for the UK economy," said IG chief market analyst Chris Beauchamp.

"European markets have made further strides too, with investors still keen to pile in even after the huge gains thanks to the more attractive valuations on offer."

In economic news, Sweden's central bank held its key rate unchanged at 4.00% as expected and said that inflation pressures had now eased enough for the policy rate to be cut in the coming months.

Meanwhile, economic sentiment in the eurozone showed signs of improvement with a closely watched survey showing businesses were becoming more upbeat about future prospects.

The sentiment index increased to a three-month high of 96.3 in March 2024, marking an uptick from February's revised figure of 95.5.

In equity news H&M rose 15% after first-quarter operating profit rose more than expected to 2.08 billion krona.

Diploma surged 9% after announcing it had bought Peerless Aerospace Fastener, a distributor of specialty fasteners into the US and European aerospace markets for £236m.

Paper and packaging maker DS Smith also jumped after reports it was now the target in a bidding war between rival Mondi - with which it has an “agreement in principle” to merge with its fellow UK-listed peer - and International Paper of the US.