LONDON, Aug 1 (Reuters) - European shares rose on Monday, snapping the previous week's sharp losses after a deal was announced to raise the borrowing limit in the United States before it runs out of credit, with banks among the best performers.
The STOXX Europe 600 Banks index gained 1.8 percent to feature amongst the stand out risers after losing 4.7 percent in the previous week following the stalemate in the U.S. debt talks.
The compromise would cut about $2.4 trillion from the deficit over the next 10 years and the deal is expected to be passed through the Senate, but it could face tough opposition in the House of Representatives.
There are also concerns the United States top-notch credit rating could be cut due to the political squabbling, which could push up borrowing costs and undermine confidence in the country.
"It is a relief rally on the back of the parties coming together, but it could only last for a couple of days as the United States could now face a ratings downgrade," Manoj Ladwa, senior trader at ETX Capital, said.
"That would impact every part of the United States."
