Summary Asian equities meanwhile rallied on hopes that the United States will avoid a default.
LONDON (AFP) - European shares rose on Friday on hopes of a deal to break the US budget deadlock, while London was lifted by an impressive stock market debut for Royal Mail.
The British capital s benchmark FTSE 100 index gained 0.64 percent to 6,471.92 points in midday deals, Frankfurt s DAX 30 rose 0.24 percent to 8,706.26 points, while the Paris CAC 40 index edged up 0.01 percent to 4,218.56 points.
"European indices are being driven higher on Friday by reports that the Republicans are pursuing a short-term increase of the debt ceiling in a bid to avoid a catastrophic US default," said Alpari analyst Craig Erlam.
"The increase, which would give government six more weeks to come to a longer-term agreement on the debt ceiling, is far from an ideal resolution, however any deal to avoid hitting it for now will always be well received in the markets."
The European single currency firmed to $1.3561 from $1.3520 in New York on Thursday. The dollar rose to 98.28 yen from 97.33 yen.
Sterling fell to 84.95 pence to the euro, near a six week low, dipped to $1.5963. The price of gold fell to $1,285.75 an ounce on the London Bullion Market, from $1,298.50 on Thursday.
In London, sentiment was boosted as shares in Britain s Royal Mail surged by more than a third in a impressive stock market debut following its controversial part-privatisation.
Royal Mail shares soared 36 percent to 450 pence at the start of conditional deals by institutional investors on the London Stock Exchange, ahead of full trading next week. That increased the value of Royal Mail to as much as 4.5 billion ($7.2 billion, 5.3 billion euros).
Asian equities meanwhile rallied on hopes that the United States will avoid a default as President Barack Obama and Republican leaders held their first talks on resolving a budget impasse that has already shut the government down.
Hong Kong advanced 1.16 percent, Tokyo rose 1.48 percent, Sydney climbed 1.63 percent and Shanghai leapt 1.70 percent in value.
Jack Ablin, chief investment officer at BMO Private Bank, said the developments suggest "both sides appreciate the gravity of a default".
He added: "It s not worth sending our country into a tailspin over ideological differences. I think investors are breathing a sigh of relief."
The gains followed Wall Street s best day since January as dealers welcomed progress on ending the crisis with less than a week before Washington runs out of cash to pay its bills.
After 10 days of deadlock, Republicans proposed to extend the US borrowing limit for six weeks in return for an agreement by Obama to negotiate on a budget that would restart federal operations. The White House said Obama would be open to a short-term debt ceiling hike.
Following 90 minutes of talks at the White House, Republican second-in-command Eric Cantor offered an upbeat report, despite no deal yet being struck, telling reporters: "It was a very useful meeting, we had a constructive conversation." He said both sides would be talking overnight in the US Thursday into Friday.
In reaction, Wall Street surged on Thursday, recovering a hefty portion of their losses since the partial government shutdown began.
US stocks mostly held onto their gains at the open on Friday.
Five minutes into trade, the Dow Jones Industrial Average gave up 0.09 percent to 15,112.07 points. The broad-based S&P 500 dipped 0.18 percent to 1,689.59 points, while the tech-rich Nasdaq Composite Index slid 0.18 percent to 3,753.83.
