The pan-European STOXX 600 is forecast to end 2026 at 670 points, about 2% above current levels and a record high, according to the median estimate in a Reuters poll conducted Aug. 12-26. That would lift the index’s 2026 gain above 13%, following an almost 17% rise in 2025. European companies reported second-quarter earnings growth of 24.1% from a year earlier, the strongest quarterly increase since the third quarter of 2022 and, excluding the post-pandemic recovery, the fastest in more than a decade. Improving earnings have supported investor confidence, but valuations have risen: the STOXX 600 trades at about 14.6 times forward 12-month earnings, a 26% discount to U.S. equities versus a record 41% gap in November 2024. Strategists remain cautious as tighter European Central Bank policy, energy disruptions linked to conflicts in the Middle East and Ukraine, and a stronger euro could weigh on stocks.