European stocks climbed off multiweek lows as investors reacted to Republican senators passing their version of President Trump’s tax reform bill, raising the possibility of some form of legislation by the end of the year.

The Stoxx Europe 600 index was up over 0.8% by 10.30 am in London, erasing losses from Dec. 1 caused by a setback to the bill's passage through the Senate.

The S&P 500 also dived on Dec. 1 after the vote on the Senate's version of Trump's tax plans was delayed due to the breakdown of a key compromise, but unlike European markets had time to recover to close just 0.2% down on the day at 2,642.

Investors and economists have said the impact of the much-anticipated reforms — which will likely see U.S. corporation tax slashed from 35% to 20% — could be crucial in extending a broad 18-month rally in risk assets into 2018.

The boost to European markets means the S&P 500 could push toward another record high, after touching 2,653.20 on Nov. 30.

"It is by no means a done deal given that the Senate bill is different to the one passed by Congress in November which means any final version is likely to be revised, and then passed by both houses, before being sent for signature by the president," said Michael Hewson, chief market analyst at CMC Markets UK, in a note to clients.

"What is unlikely to change are the headline numbers, which means that we can expect to see the corporation tax rate number reduced substantially from its current 35% to as low as 20%."