Germany's DAX rose 1.2% to 26,584 points by midday on Tuesday, extending its recovery towards its record high as chipmaker Infineon surged after record annual results. The index closed on Monday at 26,267.19 points, leaving it close to its intraday record of 26,692.90 points reached on 5 November.

European shares opened higher across the board, with France's CAC 40 up 1.2% and Germany's DAX up 1.14%, supported by falling oil prices and a recovery in shares linked to artificial intelligence. Investors were also waiting for US consumer price inflation data for October, due at 13:30 GMT.

Infineon leads the rally

Infineon Technologies was the clear leader on the DAX, jumping as much as 7% after posting record results for the fourth quarter and the full 2026 financial year, and issuing a strong revenue outlook for the year ahead. Other European chip shares also gained as the semiconductor sector recovered from recent losses.

Most sectors moved higher, led by technology, banking and industrial shares. Rheinmetall, MTU Aero Engines, Continental, Daimler Truck and Siemens Energy each rose between 2% and 4.5%, while Deutsche Bank and Commerzbank advanced about 2% apiece. Lufthansa climbed 1.7%, helped by lower oil prices.

Lower oil lifts sentiment

The rally was supported by Brent crude falling below $90 a barrel for the first time since August, after US President Donald Trump played down the prospect of further military action against Iran. Cheaper oil has eased worries about energy-driven inflation and reduced pressure for higher interest rates.

Europe's benchmark STOXX 600 index gained 0.9% to 662.54 in early trading, within 1% of its record high, as hopes for a resolution to the Middle East conflict lifted risk appetite. The pan-European benchmark last reached its record in early August.

The index has been pushing towards record territory since last week. On Monday it climbed after the US midterm elections delivered a clearer-than-expected result, easing fears of abrupt policy shocks from Washington and renewing appetite for risk assets. The DAX had already topped its August peak during that session, and Tuesday's advance keeps the November record firmly in sight.

US inflation data next

Attention now turns to the US inflation figures due later on Tuesday, which are the last reading before the Federal Reserve meets on 9 December. Markets already expect the Fed to raise rates, and a softer-than-expected reading could support the rally further, while a hot figure could quickly reverse the gains.