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European stocks closed higher on Tuesday in choppy trade as banks recovered after earlier falls and energy shares rose as crude bounced from 3-1/2 year lows.
The FTSEurofirst 300 index of top European shares was up 1.7 percent at 823.69 at provisional close in a volatile session having been down as much as 792.43 points and up as high as 827.55 points.
"We may have touched a bottom at the end of November and we are starting to see a year-end rally though it is going to be a fairly shallow one. The market is extremely volatile at the moment," said Franz Wenzel, strategist at AXA Investment Managers in Paris.
"The anticipation that the ECB is going to cut interest rates by around 75 or even 100 basis points on Thursday is also giving a boost to the market, though the roller-coaster ride should continue for some time," said Wenzel.
Energy stocks added the most points to the index. BP, Royal Dutch Shell and Total rose 2.6-2.8 percent.
Crude bounced after falling to a fresh 3-1/2 year low on Monday, following OPEC's weekend decision to defer any further output cut until mid-December. But it slipped towards the end of stock market trade and was down $1 at around $48.35 a barrel.
Banks also contributed to sizable gains on the index, although stocks within the sector were mixed.
Banco Santander, Royal Bank of Scotland, UBS were up 4.8-16.8 percent, while HSBC, Barclays and Societe Generale were down 1.4-3.4 percent.
Analysts said that European banks would need to raise much more capital if there was a repeat of the extreme economic downturns of the past, as recent cash calls largely replenished a "woefully under-capitalised" sector.
Automobiles also performed well with French auto stocks rebounding after U.S. manufacturer Ford announced it expected to reach breakeven or profitability in 2011.
Renault and Peugeot were up 9.4 and 9.6 percent respectively.
Across Europe, the FTSE 100 index was up 1.4 percent, Germany's DAX was 3.1 percent higher and France's CAC 40 was up 2.4 percent.
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Data is a real-time snapshot *Data is delayed at least 15 minutes