German stocks rallied on Thursday to extend gains from the previous session after U.S. President Donald Trump backed away from further military action against Iran.
U.S. Ambassador Kelly Craft told the UN that America stands "ready to engage without preconditions in serious negotiations with Iran, with the goal of preventing further endangerment of international peace and security or escalation by the Iranian regime".
Investors also cheered media reports suggesting that Chinese Vice Premier Liu He will travel to Washington to sign the first phase of the trade deal with the U.S. next week.
The benchmark DAX jumped as much as 196 points, or 1.47 percent, to 13,516 after rising 0.7 percent in the previous session.
Evotec shares rallied nearly 3 percent. The drug discovery and development company has announced a new five-year, multi-target partnership with Bayer AG to develop multiple clinical candidates for the treatment of polycystic ovary syndrome. Bayer advanced 1.5 percent.
Automaker BMW rose 1.2 percent after a brokerage upgrade.
Technology stocks were on the rise, with chipmaker Infineon Technologies climbing 1.7 percent.
In economic releases, German industrial production grew 1.1 percent on a monthly basis in November, offsetting a 1 percent fall in October, official data showed. Economists had forecast a 0.8 percent rise.
On a yearly basis, industrial output declined 2.6 percent after falling 4.6 percent in October. Output was forecast to drop 3.7 percent.
Separate data showed that German exports dropped by more-than-expected 2.3 percent month on month, reversing a 1.5 percent rise in October. At the same time, imports fell 0.5 percent.