By Sruthi Shankar
(Reuters) - European stocks rose to their highest in nearly three months on Tuesday, with Irish stocks soaring almost 3%, after a news report said negotiators were on the verge of a deal that would avoid Britain crashing out of the European Union.
Shares in Irish companies <.ISEQ>, which are hugely reliant on UK business and seen as a barometer of market worries about Brexit, hit their highest in more than a year.
Two EU officials said a Bloomberg report of an imminent Brexit deal was "premature". However, a third official said there had been some "serious convergence of views" in technical talks while chief EU negotiator Michel Barnier and other senior officials said progress was being made.
Any new deal will still have to go to a fractious British parliament which rejected several attempts by Prime Minister Boris Johnson's predecessor Theresa May to push through the withdrawal agreement she agreed with Brussels.
"There are indications that this could be a more palatable option compared to May's deal which has been rejected thrice previously," said Andrea Cicione, head of strategy at TS Lombard. "That's clearly a good development."
With the pound surging on the positive noise around Brexit, internationally-focused firms on London's blue chip FTSE 100 <.FTSE> came under pressure, while the domestically-focused midcap index <.FTMC> climbed 1.3%.
British banks Lloyds
The pan European STOXX 600 index <.STOXX> jumped 1.1%, with other major regional indices including Germany's DAX <.GDAXI> and France's CAC 40 <.FCHI> gaining a similar amount.
Also boosting sentiment was an upbeat start to the U.S. quarterly earnings season with better than expected reports from J.P. Morgan
Europe's bank index <.SX7P> rose 2.5%, leading gains among the major sectors, while retailers gained 2.4%.
Recruiter Hays Plc
Shares in Wirecard
Dutch semiconductor equipment maker ASML
German meal-kit company Hellofresh
(Reporting by Sruthi Shankar and Susan Mathew in Bengaluru; Editing by David Clarke)