European stocks close higher as luxury brands drive gains; France's CAC up 2%

European stocks closed preliminarily higher on Wednesday, with luxury brands driving gains, as the region's markets rebounded after touching a two-week low in the previous trading session.

The pan-European Stoxx 600 closed the session almost 0.7% higher, with most sectors in positive territory.

France's CAC 40 was up 2% at the closing bell — marking its biggest daily gain since May — with investors closely monitoring Prime Minister Sebastien Lecornu's new government after he promised on Tuesday to suspend a controversial pension reform until after the 2027 election, one of the signature economic policies of President Emmanuel Macron.

The suspension of the reform was welcomed by the Socialists, who said they would support Lecornu's government when confidence votes, called by opposition parties, are held on Thursday.

Meanwhile, Italy's FTSE MIB closed 0.4% lower, and the U.K.'s FTSE index was down 0.3%, as Germany's DAX oscillated above and below the flatline through the day to end 0.1% lower.

Europe's luxury brands led day's trading, as LVMH jumped 12.2%. Christian Dior, which owns a large stake in LVMH, gained almost 12%. Kering traded around 4.8% higher, as Moncler added 4.7% and Burberry rose more than 3.4%. Overall, the Stoxx Europe Luxury 10 was up almost 6.5%, marking its biggest daily gain since January and its second-best intraday performance this year.