European stocks were little changed at the close on Tuesday amid thin volumes during the holiday period in the region.
European trade followed the muted session in Asia where low volumes have sent shares mildly higher.
In the U.S. on Tuesday, equity markets inched higher with the Dow Jones industrial average attempting to reach the psychologically important level of 20,000.
The Nasdaq composite hit a fresh all-time intraday high in morning trade, briefly topping 5,500 for the first time ever.
BMPS recapitalization in focus
Investors are eyeing Banca Monte dei Paschi di Siena after the European Central Bank told the troubled Italian lender that it needs to plug an 8.8 billion euro ($9.2 billion) capital shortfall. Shares in the lender have not yet opened for trade. But there is caution around the broader Italian banking sector.
Analysts said that the European banking sector is in better health compared to a year ago but investors should still be cautious.
"We are certainly in a much better position than this time last year because we have a little bit more certainty particularly in regards to the capital position of many different banks around Europe," Maximilian Kunkel, ultra-high-net-worth investment strategist at UBS Wealth Management, told CNBC in a TV interview on Tuesday.
"But all in all, I think the overall picture is still one where although valuations continue to look relatively attractive … mid-cycle ROEs (return on equity), according to our calculations, are not going to surpass 8 or 9 percent, so all in all we are staying neutral on the sector."
German carmakers sell stake in mapping software
In other news, German carmakers BMW, Daimler and Volkswagen sold a stake in the HERE mapping system they own to China's NavInfo and Tencent, and Singapore sovereign wealth fund GIC. Shares of all three firms were in the red.
Meanwhile, a tick up in the oil price helped stocks in the oil and gas sector such as Italy's Saipem.