European markets closed higher on Wednesday, as investors monitor the U.S. government shutdown.
The pan-European Stoxx 600 finished trading up 1.2%, with most sectors and major bourses in positive territory.
Stocks are picking up from a positive quarter on Wednesday, with the pan-European Stoxx 600 adding 3.1% in the three months to September. Big winners in Europe in the third quarter included Spanish stocks, the banking sector and chip giant ASML. Â Â
Shares of engineering firm Arcadis were up 9.4% at the end of Wednesday's trading after it announced a 175-million-euro ($205 million) share buyback programme targeting ordinary shares. The company also officially appointed Simon Crowe as CFO, though he has been at the company since Sept. 2025 as a CFO nominee. Â
Merck's shares jumped more than 10%, amid an announcement that deputy CEO Kai Beckmann will take the reins currently held by CEO Belén Garijo. Garijo will step down from the science and technology firm in Apr. 2026.Â
Pharmaceutical stocks climbed after U.S. President Donald Trump announced efforts to lower drug prices in the U.S. AstraZeneca, for example, soared 11.2%, though a lot of chatter still surrounds the company amid a potential shift from the London Stock Exchange to New York. Roche Holdings advanced 8.6%, Zealand Pharma rose 7.4% and Novo Nordisk gained 6.4%. Â
Overnight in the U.S., the government shut down after Republicans — including President Donald Trump — and Democrats failed to reach a short-term deal on government funding. The move means crucial jobs data will not be released on schedule, clouding the outlook for the Federal Reserve just weeks ahead of its next meeting.
Back in Europe, regional leaders converged in Copenhagen on Wednesday to discuss measures to bolster the continent's security, following a recent spate of airspace incursions in countries including Denmark, Poland, Romania and Estonia.
"We clearly see that Russia has become a permanent threat to European security," Luc Frieden, prime minister of Luxembourg, told CNBC's Silvia Amaro on Tuesday.
"There's a certain kind of provocation that we have to take seriously," he added, although he stressed that Europe was not at war with Russia.
Regional defense stocks closed in negative territory. Stocks notching losses included German defense prime Renk, down about 4.2%, and German military contractor Hensoldt, which was 3% lower.
In corporate news, Spanish lender Sabadell's hostile takeover bid from domestic peer BBVA was accepted by a key board member on Tuesday. David Martinez, Sabadell's third-biggest shareholder, said he would vote for the deal to go ahead — even as the board continued to urge shareholders to reject the bid.
The revised offer values Sabadell at 16.97 billion euros ($19.78 billion).
Euro zone inflation picks up pace
European investors also weighed up various data releases on Wednesday.
Prices in the euro zone rose 2.2% on the year in September, meeting expectations, after a 2% increase in August, flash data from Eurostat showed Wednesday. The services sector logged the highest annual rate — 3.2% in September — followed by food, alcohol and tobacco, at 3%.
The S&P Global Russia Manufacturing PMI reported its fourth consecutive month of contraction, slumping to 48.2 in Sept. 2025, representing the most dramatic fall in over three years.
Meanwhile, the UK Nationwide House Price Index beat market expectations of 1.8% and ticked up to 2.2% in Sept. 2025, compared with Sept. 2024. The figures highlight an marginal increase following August's 2.1%.