Markets were encouraged by hopes of stimulus measures in China and by a growing consensus that a rift between the West and Russia was unlikely to get out of hand.
Markets in London, Paris and Frankfurt opened around 0.9 percent higher, bouncing after Monday's 1 percent drop put the region's FTSEurofirst 300 index on track for its worst month since June.
While equity markets were hunting for bargains, the euro at 1.3827, the pound at 1.6483 and the region's benchmark government bonds were little changed as they digested fresh data from the region's biggest economies.
Top of the list was German business sentiment data from Germany's Ifo institute. As expected, it dipped after this month's tensions with Russia over Ukraine. A similar survey in France saw morale largely unchanged.
In Britain, inflation data showed price increases had slowed, reinforcing views that the Bank of England would hold off on raising interest rates.
"The reason why the equity markets are doing well is a bit of a rebound from the recent sharp sell-off," said David Madden, a market analyst at IG index in London. "The euro has struggled a bit because of dollar strength more than anything, though I do think any strong sanctions slapped on Russia by the U.S. and Europe or vice-versa would knock equities again."