European equities ended Wednesday sharply higher as sentiment was boosted by a rally in banks and remarks from Federal Reserve Chair Janet Yellen on the state of the U.S. economy and global growth.
The pan-European STOXX 600 closed 1.9 percent higher provisionally. London's FTSE 100 finished 0.7 percent up, while France's CAC 40 and Germany's DAX charged ahead, both closing trade over 1.5 percent up.
Almost all sectors finished in the green Wednesday, with banks leading the way, closing up 4.9 percent; however fluctuating commodity prices capped gains in the basic resources and the oil and gas sector.
Brent crude rebounded in late trade, lasting standing up some 1.5 percent at $30.80 a barrel, while U.S. crude wavered, trading around $27.63 at Europe's close, following a mixed EIA inventory report, and news suggesting Iran was willing to negotiate with fellow OPEC member Saudi Arabia over output.
The big market event for traders on Wednesday is Yellen's testimony in front of U.S. lawmakers. Amid increasing concern over the global economy as well as market volatility, there have been doubts over the ability for the Fed to raise interest rates this year, according to analysts.
In her prepared remarks, Yellen said the U.S.'s economic path and labor market could be thrown off track by a number of factors, including a global reassessment of credit risk, tightening financial conditions and uncertainty surrounding China.
However, Yellen tried to calm nerves, saying there were reasons to believe the U.S. would stay on a path of moderate growth, allowing the central bank to commit to its gradual adjustments with monetary policy.
The euro hit session lows following Yellen's comments, off as much as 1 percent against the dollar at $1.118, before paring. Following the testimony, U.S. stocks traded higher as Yellen took questions from Congress, while markets in Asia suffered a volatile trading session, with sell-offs in Japan, Singapore and Australia.
The banking sector staged a strong comeback on Wednesday, following sharp declines in recent sessions. Germany's Deutsche Bank saw shares jump, closing up 10.2 percent, after a Financial Times report said the lender was considering buying back several billion euros of its debt, to soothe concerns about its funds.
This news added some tranquility to the otherwise unnerved banking sector, with several stocks jumping sharply higher. Several Italian banks outperformed on Wednesday, with Intesa Sanpaolo leading the way, closing up 14.4 percent, while UniCredit, Banca Popolare di Milano and Banco Populare all posted gains of 9.5 percent or more.
Earnings season continued in full flow. Shipping giant Moller-Maersk reported revenues that undershot expectations and said that its 2016 underlying results will be significantly below last year's, sending shares as much as 9 percent down, before paring to close 3.5 percent down.
In the drinks space, Danish brewer Carlsberg reported a pre-tax loss of 1.73 billion Danish crowns ($261.8 million) in 2015, and said it expects "to deliver low-single-digit organic operating profit growth and a further reduction in financial leverage" in 2016. Shares jumped 4 percent.
Rival Heineken on the other hand, raised its dividend by more than expected and forecast higher revenues and profits this year. Shares fell some 3 percent.
In the technology space, ARM Holdings, a supplier to Apple, reported a 17 percent rise in pre-tax profit in the fourth quarter of 2015, but shares in the firm were off more than 4 percent.
One of Europe's worst performers was Tullow Oil, which slipped 8.5 percent, after the company reported an operating loss for the second year running.