LONDON: Europe's stock markets struggled Tuesday to find firm ground one day after bumper gains, as investors were torn between rising oil prices and fresh economic gloom, dealers said.
Oil prices bumped higher after energy giants Saudi Arabia and Russia agreed to freeze crude output at January levels in a bid to stabilise the market, which has collapsed since mid-2014 on chronic oversupply.
The news is a much-needed positive for the oil market, which has been buffeted by a vast supply glut, overproduction, weak demand, a slowdown in the world economy and a strong dollar.
The Saudi and Russian oil ministers, along with their Venezuelan and Qatari counterparts, "agreed to freeze the production at (the) January level provided that other major producers follow suit," said Qatar's Energy Minister Mohammed bin Saleh al-Sada.
In late morning deals, London's benchmark FTSE 100 index rose 0.3 percent, with energy majors BP and Royal Dutch Shell gaining about 2.0 percent on the oil price bounce.
The Paris CAC however flatlined but French oil and gas titan Total won 1.0 percent in value.
Frankfurt's DAX meanwhile slid 0.7 percent as the ZEW economic institute's survey showing that German investor sentiment hit a 16-month low in February on fears over the recent oil collapse and China's slowdown.
Milan lost another 1.3 percent on stubborn fear over Italy's troubled banking sector.
"Whilst the German and region-wide ZEW sentiment figures weren't as bad as first thought ... they were still woeful," said Spreadex analyst Connor Campbell.
"In stark contrast to the Draghi-sustained surge on Monday, the DAX and the CAC look decidedly out of breath."
The ZEW's investor confidence index declined by 9.2 points to 1.0 point in February, its lowest level since October 2014. Analysts had been expecting an even steeper drop to zero points this month.
And eurozone confidence shed 9.1 points to stand at 13.6 points.
"Financial market experts' sentiment concerning the economic development of the eurozone has weakened," the ZEW declared in a gloomy warning.
Europe's stocks had soared Monday after European Central Bank president Mario Draghi said the bank was ready to act to stimulate the eurozone economy and push up inflation.
Wall Street reopens later following a public holiday on Monday.
In Asia on Tuesday, markets rallied on hopes that authorities will step in to boost growth in major economies.
Shanghai surged more than three percent on speculation China is preparing stimulus measures to boost the world's number two economy.
Chinese stocks were also given a lift by official figures showing bank lending surged to a record high in January, as credit gushed to help boost the flagging economy.
Analysts expect further monetary loosening after six interest rate cuts in the 12 months to November and several cuts in the amount of funds banks keep in reserve.
Shanghai led the way, finishing up 3.3 percent, while Hong Kong ended 1.1 percent up. The gains come as speculation intensifies that Beijing is preparing further stimulus after data Monday showed a slide in exports and imports.
Currency traders are also pulling back from bets on a devaluation of the yuan as China strengthens support for its currency and prospects for a US interest rate increase dim.
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