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European stocks finish higher following Yellen's comments, oil rise

European stocks posted strong gains by Tuesday's close as a rise in oil prices and the latest comments from Fed chair Janet Yellen, boosted investor sentiment.

The pan-European STOXX 600 came off session highs to close up 1.1 percent provisionally, with all sectors ending in positive territory.

London's FTSE 100 closed 0.2 percent higher, while France's CAC popped 1.2 percent, and Germany's DAX pushed even further ahead, finishing 1.65 percent up.

June U.S. rate hike ruled out

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Market analysts have been mulling comments made by Yellen on Monday at an event in Philadelphia. Yellen struck a generally positive tone on the U.S. economy, warning markets against overreacting to the disappointing U.S. nonfarm payrolls number on Friday; adding that the central bank needed to raise rates, but stepped back from giving a specific time frame.

"My overall assessment is that the current stance of monetary policy is generally appropriate...At the same time, I continue to think that the federal funds rate will probably need to rise gradually over time to ensure price stability and maximum sustainable employment in the longer run," she said.

Markets had been entertaining the prospect of a U.S. interest rate rise in June, creating volatility in both stocks and commodities. But investors appear to have scrapped that view, helping push markets higher during Tuesday's trade.

"As financial markets continued to absorb the surprise of last Friday's disappointing May payrolls report it was no surprise to hear Fed chief Janet Yellen pretty much rule out the prospect of a move in June," Michael Hewson, chief market analyst at CMC Markets, wrote in a note.

Indices were also supported by positive European data. Euro zone gross domestic product grew 0.6 percent quarter-on-quarter in the first quarter, and by 1.7 percent year-on year, according to a revision by Eurostat.

Meanwhile in energy markets, oil prices posted solid gains with both Brent and U.S. crude above $51 and $50 per barrel at Europe's close respectively, on the back of a weaker dollar and falling Nigerian oil output. Oil and gas was Europe's best performing sector, ending 2.6 percent up, with Tullow Oil jumping over 4.5 percent after Investec raised its price target on the stock.

Basic resources however under-performed fellow sectors as a sharp decline in copper, zinc and lead futures weighed on the sector. Glencore fell 2.8 percent. This comes after a U.S. judge saying that the company must face a lawsuit which accuses it of trying to drive up the price of high-grade zinc by monopolizing the market.

Elsewhere, Asia markets closed higher following news out of Australia and India's central banks. U.S. stocks traded higher, as traders eyed the oil price.

Shell, K+S rallies

In corporate news, Royal Dutch Shell held its Capital Markets Day on Tuesday. The oil major outlined plans grow free cash flow and returns and leave up to 10 countries to cut costs following its acquisition of BG Group. Shares of Shell closed up 3.7 percent.

Meanwhile, Sports Direct was in focus, after the sportswear chain's founder admitted to British politicians that workers at his company's warehouse were paid less than the U.K.'s minimum wage. Shares outperformed most stocks, jumping 5.4 percent.

French bank Natixis popped over 3 percent after Jefferies put a "buy" rating on the stock. Chemicals company K+S also rallied over 4 percent, after the Kassel public prosecutor's office announced that they had dropped their investigations into suspected water pollution, as no evidence of misconduct was found.

And German lawmakers called on the European Union to tighten rules around fitting cheat devices on cars to test emissions after the scandal involving Volkswagen last year. Shares in carmakers closed sharply higher, up 2 percent as a sector, however.

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