European stocks were set to wrap up September with the best performance since 2019, as optimism around resilient US economic growth and lower interest rates lifted risk appetite.

The Stoxx Europe 600 Index was little changed by 8:17 a.m. in London. The gauge has gained nearly 1% in September during a typically weak seasonal period.

Financial services and media sectors outperformed, while energy and chemicals shares were the biggest laggards. In individual stocks, Asos Plc dropped 10% as it warned full-year earnings would be at the lower end of expectations as the online fast fashion chain works on a complex turnaround plan. 

Lumber stocks Stora Enso Oyj and UPM-Kymmene Oyj dipped after Trump ordered 10% tariffs on imports of softwood timber and lumber, as well as 25% levies on kitchen cabinets, vanities and upholstered wood products. 

European stocks have traded in a narrow range in the past four months as investors assessed signs of a slowing US economy against the outlook for further Federal Reserve interest-rate cuts. The blue-chip Euro Stoxx 50 is approaching its March record.

Still, some caution is setting in ahead of a looming US government shutdown that could delay the key jobs report on Friday. 

Roland Kaloyan, head of European equity strategy at Societe Generale SA, said he was sticking with his year-end target of 530 points for the Stoxx 600, implying declines of around 4% from current levels. 

"I don't think the double-digit earnings growth expected for next year will materialize; that's why I'm not buying 2026," he said.

Elsewhere, a UBS Group AG basket of defense stocks was little changed after President Donald Trump and Israeli Prime Minister Benjamin Netanyahu agreed on a 20-point plan designed to end the war in Gaza. 

Source: Bloomberg