By Shashwat Chauhan and Amir Orusov
(Reuters) -European shares climbed to record highs on Wednesday, with steel stocks leading the way after the EU said it plans to cut steel import quotas, while a broader
bank rally offset some of the weakness in automakers following BMW's forecast cut.
The pan-European STOXX 600 was up 0.5% at 572.2 points by 0903 GMT. Most local bourses also climbed, with stocks in the UK and Germany up about 0.3% each.
Banks were the biggest boost to the benchmark, up nearly 1%, with British lender Lloyds, France's Societe Generale and Italy's BPER Banca leading gains.
European steelmakers, including ArcelorMittal and Aperam, gained after the European Commission proposed cutting tariff-free steel import quotas by almost half.
ArcelorMittal, Aperam, Thyssenkrupp and SSAB jumped over 3% each and the broader basis resources index jumped 0.7%.
In contrast, BMW tumbled 8.9% after the carmaker cut its 2025 earnings forecast due to changed U.S. tariff assumptions and weaker-than-expected growth in the Chinese market.
Rival Mercedes fell 3.6%, while the broader autos index eased 2.3%.
Technology stocks fell 0.4%, with chip-related companies ASML and ASMI leading declines after U.S. lawmakers called for broader bans on sales of chipmaking equipment to China.
Meanwhile, the political situation in France remains in focus as caretaker Prime Minister Sebastien Lecornu struck a cautiously optimistic tone on Wednesday, saying a deal could potentially be reached on the country's budget by year-end, making the possibility of a snap election less likely.
"The market is understanding this as a move in the right direction. However, the political instability and fiscal concerns in France remain," said Fiona Cincotta, senior market analyst at City Index.
"Until France is actually able to approve a budget which helps to reduce the budget deficit, the political situation will remain fragile."
French stocks logged modest gains, with the blue-chip CAC 40 up 0.6% and mid-caps rising 0.9%, hovering near levels seen last week.
Stocks in one of Europe's biggest economies dropped earlier this week after Lecornu's sudden resignation on Monday. The French benchmark remain one of the worst performing indexes in 2025, up about 8% so far compared to double-digit growth in most European bourses.
Among other stocks, Umicore climbed 5.3% after the Belgian metal recycling group said it plans to sell its permanent gold inventories for about 410 million euros ($476 million.
Unite Group fell 6.9% after the British student accommodation developer reported softer rental growth in the third quarter.
(Reporting by Shashwat Chauhan in Bengaluru and Amir Orusov in Gdansk; Editing by Saumyadeb Chakrabarty and Sonia Cheema)
