European stocks erased their decline in the final half an hour of trading, leaving the Stoxx Europe 600 Index at a five-year high, as U.S. equities rebounded after Congress agreed to extend the American government’s debt limit.

The Stoxx 600 added 0.1 percent to 315.98 at the close, rebounding from a decline of as much as 0.6 percent. The equity benchmark rose to its highest level since June 2008 yesterday on optimism U.S. lawmakers would reach a deal to reopen the government and increase the debt ceiling.

In the U.S., President Barack Obama signed into law a measure to extend the nation’s borrowing authority into early 2014 and end the government shutdown that started Oct. 1. The deal avoided a default and means that federal workers will return to their jobs from today.

The Standard & Poor’s 500 Index rose as high as 1,726.15, above its record close on Sept. 18.

Dagong Global Credit Rating downgraded the U.S. to A- from A and reiterated its negative outlook on the government of the world’s largest economy. The rating company said the U.S. will struggle to avoid repeating this week’s political impasse over the limit on sovereign debt, according to a statement.

National benchmark indexes climbed in 10 of the 18 western-European markets. The U.K.’s FTSE 100 gained 0.1 percent and France (CA)’s CAC 40 dropped 0.1 percent, while Germany’s DAX declined 0.4 percent.

Sulzer fell 4.4 percent to 132.20 Swiss francs after predicting that 2013 sales will probably not exceed the 4.02 billion francs ($4.5 billion) generated in 2012. The pump manufacturer predicted slight growth for revenue this year when it reported half-year results on July 23. That was a downgrade from an earlier forecast for moderate growth.

Outotec slumped 15 percent to 8.23 euros. The Finnish company forecast that it will generate no more than 2.1 billion euros ($2.9 billion) in sales in 2013 because its order intake has declined in the first nine months of this year. Outotec had predicted revenue of as much as 2.3 billion euros.

Nutreco NV slid 4 percent to 36.26 euros after the world’s largest supplier of fish feed forecast earnings before interest, taxes and amortization of about 255 million euros in 2013. The company had predicted it would at least match last year’s 262.1 million euros.