European stock markets advanced on Tuesday, closing at record levels. A renewed surge in artificial intelligence-related trading provided additional momentum for the rally, helping European equities achieve their strongest quarterly performance since the end of 2020.

The Stoxx Europe 600 Index closed up 0.9% in London, breaking through the key 640-point level that had capped the benchmark in recent sessions. The index gained 10% for the quarter, with Spain's IBEX 35 Index and Italy's FTSE MIB Index also recording their best three-month performances in over five years.

The technology sector was the top performer, led by a 6.8% surge in ASML Holding. Defensive sectors such as telecommunications and consumer goods & services lagged behind.

In recent weeks, gains in technology stocks have driven the broader market higher. Concurrently, a decline in energy prices following reports of a ceasefire agreement between the US and Iran has eased inflation concerns and prompted a rotation of funds into more cyclical sectors. Market focus is now increasingly shifting towards second-quarter earnings. Strategists at Deutsche Bank anticipate corporate profits will grow by 14%, which is 2 percentage points higher than the market consensus.

Kyle Rodda, a senior financial market analyst at Capital.com, noted that market optimism is being fueled by "positive signals from US-Iran peace talks, along with some quarter-end trading activity."

Rodda wrote in a report, "Whether this price action is just noise or a signal will become clearer in the coming days, even weeks. It will depend on the balance between geopolitical risks, uncertainty around US interest rates, and the earnings outlook."

In individual stock movements, shares of Abivax soared 39%, marking their best single-day performance in a year. This surge followed the company's release of updated clinical trial results that alleviated investor concerns about potential cancer-related side effects of its most promising experimental drug, obefazimod.