European shares hit 1-month high on stimulus hopes

European equities rallied to a 1-month closing high on Tuesday after disappointing German data rekindled expectations of new monetary stimulus, which could send equities on a short-term rally.

German economic sentiment posted its biggest monthly drop since 1998 in June, data showed, triggering talk the U.S. Federal Reserve, which starts a two-day meeting on Tuesday, and the European Central Bank may act.

"The Fed will probably act this week," Claudia Panseri, a strategist at Societe Generale, said. "Risk assets will probably be higher for a few days on the announcement."

The pan-European FTSEurofirst 300 <.FTEU3> added 1.6 percent to 1,009.08 points, with financial and cyclical stocks the main sectoral gainers.

(Reporting By Francesco Canepa; editing by Simon Jessop)

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