European stocks opened higher on Thursday, echoing the upbeat sentiment on Wall Street on signs that Washington was edging closer to a deal to raise the U.S. debt ceiling and avoid a default.

The continent-wide STOXX 600 index rose 0.4% by 0708 GMT, with automakers and technology stocks leading gains.

U.S. stocks rallied on Wednesday after President Joe Biden and top U.S. congressional Republican Kevin McCarthy reiterated their determination to strike a deal soon to raise the debt ceiling and avoid an economically catastrophic default.

Volkswagen added 2.6% on the carmaker's plans to overhaul its core brand to increase efficiency and returns.

The stock was the top gainer in Germany's blue-chip DAX , which rose 0.9% to a fresh one-and-half-year high.

Deutsche Bank AG slipped 1.3% after it agreed to pay $75 million to settle a lawsuit by women who say they were abused by the late financier Jeffrey Epstein, and accused the German bank of facilitating his sex trafficking.

British luxury fashion brand Burberry fell 4.9% even as it reported stronger-than-expected fourth-quarter sales.

Several markets, including those in the Nordics and Switzerland, were closed for Ascension Day. (Reporting by Sruthi Shankar in Bengaluru; Editing by Savio D'Souza)