European and UK equity markets climbed to record highs this week, driven by strong gains in banking and mining stocks as investors responded to solid corporate earnings and renewed strength in commodity prices.

London’s benchmark index surged to an all-time peak, supported by heavyweight mining groups benefiting from firmer metal prices and improved demand expectations from Asia.

Financial stocks also advanced sharply, as investors reassessed the outlook for interest rates and bank profitability amid persistent inflation and resilient economic indicators.

Across continental Europe, major indices in Frankfurt and Paris likewise touched record territory.

Bank shares were among the strongest performers, buoyed by expectations that interest rates may remain elevated for longer than previously forecast, supporting net interest margins.

Meanwhile, energy and materials companies gained on the back of rising oil and base metal prices, reflecting tightening supply conditions and steady global demand.

Market analysts noted that the rally reflects a combination of robust earnings results, improved investor sentiment and confidence that economic growth, while moderating, remains sufficiently stable to underpin corporate performance.

Recent data have suggested that the eurozone economy is showing signs of stabilisation after a prolonged period of subdued expansion.

In the UK, the performance of multinational companies with overseas revenues has also been aided by currency movements, while defensive sectors such as healthcare and consumer staples provided additional support to the broader index.

Despite the record highs, investors remain attentive to upcoming central bank meetings and inflation data releases, which could influence the trajectory of interest rates in the coming months.

For now, however, the strength in banks and miners has been sufficient to push European equity benchmarks into uncharted territory.