Europe stocks rise in a volatile week sparked by DeepSeek’s new AI model

European stock markets were higher Friday, after a slew of earnings, data and monetary policy decisions saw the benchmark Stoxx 600 index close at a record level in the prior session.

Despite some volatility early in the year, the Stoxx 600 is set to end January with a monthly gain of more than 6%, outperforming the U.S. S&P 500 which has climbed just over 3%.

Smiths Group was the top performing stock, closing more than 11% higher, after the British engineering group announced plans to demerge or sell off parts of its business to “focus on high performance industrial technologies.”

The European Central Bank confirmed expectations of a quarter-point interest rate cut Thursday, bringing its main rate to 2.75%. ECB President Christine Lagarde’s warnings about the weakness of the euro zone economy, combined with growth figures on Thursday showing the bloc stagnated in the fourth quarter of 2024, reinforced market bets that the central bank will cut three more times to reach 2% by the end of the year.

That is despite risks to euro depreciation against the U.S. dollar from rate differentials. The Federal Reserve on Wednesday held rates as it highlighted inflation risks, leaving traders questioning whether it will even enact the two rate cuts this year previously projected by policymakers.