European stock markets traded sharply higher Thursday, continuing the week’s volatile trading with sentiment boosted by falling energy costs and signs of compromise in Washington over averting a U.S. default.

At 3:40 AM ET (0840 GMT), the DAX in Germany traded 1.2% higher, the CAC 40 in France rose 1.2% and the U.K.’s FTSE 100 climbed 1%.

European markets have benefited Thursday from the abrupt reversal on Wall Street late Wednesday, after Senate Minority Leader  offered a short-term suspension of the U.S. debt ceiling to avert a national default until a more permanent solution can be found before the end of the year.

U.S. Treasury Secretary Janet Yellen recently said such a default would cause “irreparable” harm, in the form of a financial crisis and a recession.

By 3:40 AM ET, U.S Crude futures traded 1.9% lower at $76.00 a barrel, the Brent contract was 1.2% lower at $80.16.

Investors should buy dips in European equities, Barclays  said, in a note published Wednesday, arguing that stocks still offer more value than bonds even if price-to-earnings ratios are high and earnings per share growth is set to moderate.

In corporate news, Royal Dutch Shell  stock rose 0.3%, the energy giant expecting a significant boost to cash flow in the third quarter on the back of the elevated natural gas and electricity prices (even after a significant production outage in the Gulf of Mexico).

Sika  stock rose 2%, as the Swiss construction chemicals group expressed confidence that it could overcome rising raw material costs and supply chain restrictions to increase its sales and profit margins this year. Paper and packaging group Mondi  also rose 1.9% after saying it is passing on most of the recent rises in input prices to its customers.

There was some disappointing economic news Thursday, as German Industrial Production slumped 4.0% in the month in August, a hefty drop from the 1.0% gain seen in July. This follows Wednesday’s sharp 7.7% fall in , and points to factory orders the difficulties Europe’s largest economy has been having with supply chain constraints.

Elsewhere, speeches from European Central Bank members Philip Lane and Isabel Schnabel are likely to draw attention following talk that the central bank is studying a new bond-buying program to prevent any market turmoil when emergency purchases get phased out next year.

The FTSE MIB climbed Down by  0.79% to 25,814.20. In the cash markets, the DAX  Germany was trading Up 1.03%  to 15,123.65. CAC 40  in France  rose by 0.95% to 6,554.37 while the FTSE 100  in the U.K. were up  by 0.69% to 7,043.35. ,at the time of writing.