European equities rebounded on Tuesday, with the energy sector in focus after BP struck a deal to settle potential claims linked to the US Gulf of Mexico oil disaster.
Stocks were also lifted by rising optimism over a positive outcome to the ongoing Greek debt crisis.
On the downside, shares in SABMiller slid after Australian beer giant Foster's rejected a US$10-billion takeover bid from the Britain-based brewing giant.
But SABMiller said in a statement that it would continue to pursue the group, which is one of Australia's best known brands.
In midday deals, London's benchmark FTSE 100 index of top shares rose 0.72 percent to 5,734.39 points, Frankfurt's DAX 30 won 0.72 percent to 7,202.09 points and in Paris the CAC 40 index gained 1.06 percent to 3,840.20.
The Stoxx 50 index of leading eurozone companies increased by 0.96 percent to 2,774.27 points.
Indices had closed lower on Monday as the banking sector slumped on concerns over exposure to Greece.
"The markets may have bounced but this does not mean we are out of the woods just yet," said ETX Capital trader Manoj Ladwa, in reference to the ongoing Greek-eurozone debt crisis.
"Despite the FTSE recovering the drop of the past few days, volume is light as traders show a reluctance to commit funds. Until the sovereign debt issues with Greece are resolved, any rallies are likely to be short-lived."
BP shares rallied 2.92 percent to 442.2 pence after announcing overnight that it had struck a deal with oil services company Weatherford International, to settle potential claims between them linked to the Deepwater Horizon accident.
"BP and Weatherford have agreed to mutual releases of potential claims against each other, and BP has agreed to indemnify Weatherford for compensatory claims resulting from the accident, including claims brought relating to pollution damage stemming from the accident," BP said in a statement.
"The agreement is not an admission of liability by any party regarding the accident," it added.
A presidential commission last January found that the Deepwater Horizon incident was the product of complex causes involving multiple parties.
"Weatherford is the first of BP's contractors to formally agree with BP that the entire industry can and should learn from the Deepwater Horizon incident," BP added.
Under the deal, Weatherford, which manufactured the float collar used in the well, will pay BP $75 million.
The technology sector was boosted after British IT services group Misys revealed that it had received a preliminary takeover approach.
Misys shares rallied by 8.11 percent to 415.7 pence on the London's second-tier FTSE 250 index, which was 0.67 percent higher at 11,615.26 points.
On the FTSE 100, brewer SABMiller slumped 3.44 percent to 2,107 pence.