European shares rise on US budget deal hopes

PARIS (REUTERS) - European shares rose on Tuesday, with the euro zone blue-chip index hitting a near 17-month high, as investors bet that United States (US) Democrats and Republicans would reach a deal to avoid looming austerity measures.

Expectations of a deal rose in Washington, boosting US stocks, after House of Representatives Speaker John Boehner emerged from a meeting with fellow Republicans pledging to press forward on talks to avert a deadlock.

The FTSEurofirst 300 index of the biggest European shares gained 0.4 per cent in brisk volumes, to close at 1,137.43 points. That was just a few points shy of its 2012 high of 1,141.32 hit last week.

Cyclical shares featured among the biggest gainers, with mining giants Rio Tinto up 2.8 per cent and Anglo American up 2.1 per cent, while banks also rallied, with UBS rising 1.9 per cent and Banco Santander gaining 2.2 per cent.