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Europe ends higher despite China, oil concerns

European markets finished higher on Tuesday, as global sentiment regained some ground after steep falls in the previous session.

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The pan-European STOXX 600 ended trade around 0.6 percent higher provisionally, with most sectors finishing in positive territory. London's FTSE closed up 0.7 percent, boosted by its mining sector. However, France's CAC and Germany's DAX wavered, both closing up around 0.3 percent.

China $20B cash injection

Asian markets remain firmly in focus for investors after Chinese equities plunged on Monday's session, on the back of weaker manufacturing surveys that renewed concerns for the country's growth prospects. Also spooking investors was the prospect that a six-month lockup on sales by big shareholders was due to expire Friday, sparking fears of an exodus by companies' large stakeholders.

In a bid to calm the markets, China's central bank injected 130 billion yuan ($19.9 billion) in short-term funds into the country's financial system. Still, China's shares oscillated between gains and losses, even as other Asia markets recovered.

China's securities watchdog, the China Securities Regulatory Commission (CSRC), defended its use of a new circuit breaker on the countries' volatile stock exchanges on Monday, saying that the mechanism protected investors and calmed markets.

The intervention by the People's Bank of China (PBoC) helped push metal prices slightly higher, pushing the basic resource sector up sharply, after it took a battering on Monday. Glencore and ArcelorMittal were top gainers in the sector, closing up 3.5 and 6.1 percent respectively.

However, oil prices continued to weigh on sentiment, as both Brent and U.S. crude slipped sharply on concerns over China and a strong U.S. dollar. Both were trading within the low to mid $36 range by Europe's close. The drop caused oil stocks to tumble, with oil services firm Subsea 7 tanking to the bottom of the STOXX 600, off 10 percent.

Home Retail shares spike 41%

Orange and Bouygues were in focus after Orange confirmed it was in talks with Bouygues to buy its telecoms unit. Shares in both firms closed higher and gave a boost to other stocks in the sector. Numericable-SFR soared to the top of benchmarks, up over 12 percent while Altice jumped 9.3 percent. France's Iliad also posted strong gains.

British supermarket chain Tesco came off session highs, yet remained 1.5 percent higher by the close, after Deutsche Bank raised its outlook on the stock from "hold" to "buy".

Another retailer, Sainsbury's confirmed that it had made an approach to Home Retail Group in November, however the move was ultimately rejected. Sainsbury's shares slipped sharply on the news, closing over 5 percent down, while London-listed Home Retail skyrocketed 41 percent.

Meanwhile, U.K. clothing retailer Next reported disappointing fourth-quarter sales which it attributed to unusually warm weather in November and December, sending shares to close sharply lower, by 4.6 percent.

And embattled German carmaker Volkswagen slipped down 4 percent after the U.S. Department of Justice sued the company for allegedly cheating emissions test by installing special software.

On the data front, new figures showed consumer prices rose 0.2 percent in December in the euro zone.