By 0950 CET, the Stoxx 600 was up 0.3% at 522.50, with gains recorded across most major European indices as banking stocks rose following forecast-beating results from sector giant HSBC.

German consumer sentiment is expected to improve in November, according to a survey released on Tuesday by GfK and the Nuremberg Institute for Market Decisions (NIM). The forward-looking consumer climate index for November is expected to rise by 2.7 points to -18.3 from October’s revised -21.0. This is the highest level since April 2022, although the level of consumer climate remains low.

"The uncertainty caused by crises, wars and rising prices is still very much present and is preventing factors that encourage consumption, e.g. the real income growth, from taking full effect," said Rolf Buerkl, consumer expert at NIM.

In the UK, shop prices were 0.8% lower in October than 12 months ago, compared with a 0.6% year-on-year fall in September, according to the BRC/NielsenIQ Shop Price Index. This was the third straight month of annual deflation and lowest rate of change since August 2021.

Oil prices were partially rebounding after tanking more than 5% on Monday after airstrikes sent from Israel to Iran avoided oil and nuclear facilities, easing concerns of disruptions to supply. Brent crude was up 0.6% at $71.44 a barrel.

"Oil prices are staging a mild recovery on Tuesday, after Monday’s rout, however the Brent crude oil price is still below $72 per barrel. The oil price is helping the positive risk environment, as it could weigh on inflation and price pressures down the line," said Kathleen Brooks, research director at XTB.

Market movers

HSBC rose 4.5% after announcing another $3bn share buyback as it posted better-than-expected third-quarter profits, underpinned by solid performances from the wealth and investment banking units. In the three months to the end of September, pre-tax profit rose 10% on the same period a year earlier to $8.5bn, versus analysts’ expectations of $7.6bn.

Banks in general were on the rise across Europe, including Deutsche Bank and Commerzbank in Frankfurt, Societe Generale in Paris, and HSBC's UK-listed peers Standard Chartered and Barclays.

However, Banco Santander dropped in Madrid after underwhelming with a record quarterly profit that beat forecasts. The Spanish bank said it was delaying the release of its UK results as it considers the impact of a ruling on motor finance commissions.

BP posted a slide in quarterly profits, hit by weaker refining margins, although the decline was not as steep as feared. However, shares fell with sentiment in the oil sector still weighed down by the sharp drop in the price of the commodity the previous day.

Meanwhile, Hargreaves Lansdown edged higher on the back of a positive first-quarter update, with assets under administration reaching £157.3bn, an increase of £2bn on the previous three months.