European stocks rose the most in five weeks amid signs U.S. lawmakers will agree on a compromise deal to avoid an unprecedented default.

The Stoxx 600 added 1.7 percent to 310.18, its highest level since Sept. 2, as U.S. President Barack Obama prepared to meet Republican lawmakers to discuss the federal budget and debt limit. The benchmark gauge yesterday declined for a third day amid concern that the impasse may lead to a default.

National benchmark indexes advanced in all 18 western European markets.

FTSE 100 6,430.49 +92.58 +1.46% CAC 40 4,218.11 +91.06 +2.21% DAX 8,685.77 +169.08 +1.99%

House Republican and Senate Democratic leaders are open to a short-term increase in the $16.7 trillion debt limit, said congressional aides of both parties who spoke on condition of anonymity. Economists say a failure by the world’s largest borrower to repay its debt will devastate stock markets and throw the U.S. and world economies into a recession.

The U.S. government is in its 10th day of a partial shutdown and has just a week before the government’s borrowing authority lapses Oct. 17. Obama meets with 18 House Republican leaders and committee chairmen at 4:35 p.m. in Washington.

In Europe, the Bank of England left its benchmark interest rate unchanged today. Reports showed industrial output in France rose 0.2 percent in August, the first increase in four months. That fell short of the median estimate of economists, which forecast a 0.6 percent gain. A similar measure of output in Italy dropped 0.3 percent in August. Economists had projected a 0.6 percent increase.

Ladbrokes (LAD) rallied 2.7 percent to 184.7 pence, posting the biggest two-day gain since April 2009. A mystery buyer, thought to be Sagi, bought a stake in the U.K. bookmaker, the Telegraph reported. The deal, through Shore Capital, was just below the 3 percent disclosure limit, according to the Telegraph. CGG jumped 2.1 percent to 15.84 euros. The oilfield surveyor said third-quarter vessel-production rate increased to 94 percent, from 90 percent in the same quarter last year and 92 percent in the second quarter of this year.

Arkema SA (AKE) added 4.7 percent to 83.95 euros. UBS AG raised its rating on the French chemicals maker to a buy from neutral, saying the stock is undervalued. The firm also boosted its price target to 100 euros from 80 euros.

Hays Plc gained 2.1 percent to 118 pence. The U.K’s largest professional-recruitment agency said first-quarter net fees rose 2 percent from last year on a comparable basis.

Mediaset SpA rallied 4.7 percent to 3.46 euros. HSBC Holdings Plc lifted its price target on the broadcaster controlled by former Italian Prime Minister Silvio Berlusconi to 2.60 euros from 1.50 euros. The firm maintained its underweight recommendation, which is similar to sell.

U.S. stock-index futures climbed amid signs the nation’s lawmakers may agree on a compromise deal to avoid a debt default..

Global Stocks:

Nikkei  14,194.71 +156.87 +1.12%

Hang Seng 22,951.3 -82.67 -0.36%

Shanghai Composite 2,190.93 -20.84 -0.94%

FTSE  6,389.11 +51.20 +0.81%

CAC  4,194.83 +67.78 +1.64%

DAX 8,627.28 +110.59 +1.30%

Crude oil $101.35 -0.26%

Gold $1300.10 -0.54%

Upgrades:

Hewlett-Packard (HPQ) upgraded to Hold from Underperform at Needham  

Hewlett-Packard (HPQ) upgraded to Sector Perform from Underperform at RBC Capital Mkts

Hewlett-Packard (HPQ) upgraded to Neutral from Underperform at Mizuho

Downgrades:

Other:

Google (GOOG) target lowered to $900 from $966 at Telsey Advisory Group

Boeing (BA) initiated with a Buy at Canaccord Genuity

Asian stocks swung between gains and losses as health care shares rose while energy companies and materials producers declined. Japanese equities climbed as the yen weakened.

Nikkei 225 14,194.71 +156.87 +1.12%

Hang Seng 22,951.3 -82.67 -0.36%

S&P/ASX 200 5,147.14 -5.85 -0.11%

Shanghai Composite 2,211.77 +13.57 +0.62%

BHP Billiton Ltd., the world’s biggest mining company, fell 0.6 percent in Sydney to the lowest close since July 29.

Alfresa Holdings Corp., which makes drugs and medical devices, gained 3.1 percent in Tokyo.

Honda Motor Co., the Japanese carmaker that gets almost half its sales in North America, added 2.5 percent as the yen slid for a third day on optimism the U.S. government will avoid default.

Sa Sa International Holdings Ltd. dropped 5.3 percent in Hong Kong after Credit Suisse Group AG said the cosmetic retailer’s sales during China’s week-long holiday missed estimates.

Nikkei 225 14,037.84 143,23 1,03%

Hang Seng 23,033.97 -144,88 -0,63%

S & P / ASX 200 5,152.99 +3.54 +0.07%

Shanghai Composite 2,198.2 23,53 1,08%

FTSE 100 6,337.91 -27.92 -0.44%

CAC 40 4,127.05 -6.48 -0.16%

DAX 8,516.69 -39.20 -0.46%

Dow +28.64 14,805.17 +0.19%

Nasdaq -17.05 3,677.78 -0.46%

S&P +0.91 1,656.36 +0.05%