A debt default by the United States would have a catastrophic knock-on effect around the world, economists have said.

ROME, June 1 (Xinhua) -- European markets breathed a sigh of relief on Thursday after lawmakers in the United States appeared poised to pass a measure that would avoid a debt default by the world's largest economy.

On Thursday, all of Europe's main financial markets finished the trading day in the black on the news that the U.S. House of Representatives had smoothly passed a bill that would suspend the country's debt ceiling. The Senate is expected to follow suit and pass the measure on Friday or over the weekend.

Without this bill, the U.S. would risks defaulting on its debt for the first time ever. A debt default by the United States would have a catastrophic knock-on effect around the world, economists have said.

Markets were also boosted by preliminary estimates showing that inflation in the eurozone declined in May after a rise in April. That could ease pressure on the European Central Bank, which has been raising interest rates to reduce inflation.

In Milan, the Italian Stock Exchange's blue-chip index added 2.0 percent, while Germany's stock exchange in Frankfurt gained 1.0 percent. In Paris, stocks stood 0.6 percent higher, while in Amsterdam they added 1.0 percent and in Madrid, the main index gained 1.3 percent.

Trading in Italy reached a particularly high volume on Thursday given that this was the last trading day of the week. This Friday is a national holiday in Italy.

In London, Europe's largest stock exchange by market capitalization, the blue-chip index gained 0.6 percent. The United Kingdom is not a member of the 20-nation eurozone.

Among the market leaders were banking stocks and the shares of companies with high exposure to U.S. markets. Those companies would have suffered the most had the United States defaulted on its debt payments.

The good news from the other side of the North Atlantic came just in time to restore investor confidence in Europe, after data released this week showed that Germany, Europe's largest economy, had entered into a technical recession, meaning that its economy had back-to-back economic quarters of negative growth.

Like most European economies, Germany's contracted in the final quarter of 2022, shrinking by 0.5 percent. But while preliminary data show other major European economies registered at least a mild growth in the first quarter of this year, the German economy contracted further by 0.3 percent.

According to economists, the European economies still face other risks, including a persistently high inflation, which despite a downward trend in May, still remains well above the historical average. Moreover, high-interest rates, trade routes disrupted by the ongoing conflict between Russia and Ukraine, and sluggish economic growth prospects are also weighing on the bloc's economies.