European shares posted strong gains on Wednesday, helped by a successful bond auction in Italy and the U.S. Federal Reserve's defense of its asset purchases.
Almost all the major benchmarks in Europe closed higher on Wednesday, clawing back some of the previous session's sharp losses, after Italy managed to sell the top planned amount of 4 billion euros of 10-year bonds, as well as 2.5 billion euros of five-year bonds.
However, yields on the 10-year bonds reached their highest levels since October 2012.
Italian political parties are trying to find a way out of a stalemate situation after none of them won enough votes in this weekend's general election to have a parliamentary majority in the Senate.
Political tensions are already rising with the leader of Italy's protest "5 Star" movement, Beppe Grillo pouring insults on the leader of the center-left Democratic Party Pier Luigi Bersani and calling him "a dead man talking."
Meanwhile, the European Commission released data on Wednesday which showed business confidence rose in the euro zone for the fourth straight month in February, providing an added boost to risk assets.