Europe midday: Shares pace gains as US debt deal agreed

European markets made further gains by midday on Friday after US lawmakers passed the debt ceiling deal, avoiding the prospect of a default.

The pan-European Stoxx 600 index was up 0.72% with all major bourses higher after US Senators voted 63-36 to approve the bill passed on Wednesday by the House of Representatives, averting what would have been a first-ever default.

Sentiment was also boosted by comments from several US Federal Reserve officials this week supporting a pause in interest rate rises this month. Philly Fed president Patrick Harker said overnight it was time "to hit the stop button and see how it goes".

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said the debt deal "clears the path to more normal business to resume", but noted markets were"very much betting that officials would indeed sort out the issue before default occurred".

"The spotlight will now pivot to focus on non-farm payroll data due from the US later today, with hiring expected to have cooled in May. This will be one of the last important data sets before officials decide if interest rates should continue to be pushed uphill or paused."

US nonfarm payrolls are expected to show 180,000 jobs were added in May.

In economic news, French industrial production rose more than expected in April, with output up 0.8% versus March - above the 0.3% growth forecast - and a swing from the 1.1% fall recorded in the previous month.

The main equity news was UK-based vet pharma company Dechra Pharmaceuticals agreeing a £4.46bn bid from private equity firm EQT. Shares in the company surged on the news.

"This gives the firm an enterprise value of close to £5bn and follows a period of uncertainty for the group after trading turned challenging because of destocking by wholesalers. The pet boom should broadly play into a positive story for Dechra, but the deal will end shareholders’ long-term bets on the company, but it will also remove doubt stemming from the sensitive share price," Lund-Yates said.

Reporting by Frank Prenesti for Sharecast.com