LONDON/MILAN: European shares edged higher on Tuesday, helped by firmer energy stocks and takeover activity, recovering some ground following a pullback in the previous session prompted by worries over a post-election political stalemate in Spain.
Trading was volatile as the holiday season approached and some investors were cautious over prospects for next year.
The pan-European FTSEurofirst 300 index, which had fallen 1.2 percent on Monday, rose 0.3 percent by 1111 GMT, while the euro zone's blue-chip Euro STOXX 50 index was up 0.1 percent.
"There are no easy gains to make," said Marco Vailati, head of research and investment at Italy's Cassa Lombarda.
"Companies must deliver on the earnings front, the Greek crisis is still unresolved and there is political instability in Spain. Against this uncertain backdrop, investors should be opportunistic and seek to buy on the dips and sell during the moments of euphoria," he said.
The FTSEurofirst and Euro STOXX 50 are both up by around 3 percent since the start of 2015, with economic stimulus measures from the European Central Bank having helped support markets in spite of headwinds such as a slowdown in China and political uncertainty in countries such as Spain and Greece.
On Tuesday, oil stocks such as BP and Royal Dutch Shell recovered as oil prices edged away from multi-year lows.
"The oil price is still the big driver of market sentiment at the moment for stock markets, but I'm not sure if it will hold above those lows, given the concerns about a glut of supply," said Hantec Markets' analyst Richard Perry.
Nevertheless, there was further support for stocks in the form of takeover activity, which gave a boost to markets after the pullback on Monday that had been caused by concerns over an inconclusive election result in Madrid over the weekend.
Shares in USG People surged 27 percent after Japanese employment agency Recruit agreed to buy the Dutch staffing company for 1.4 billion euros ($1.53 billion), a 31 percent premium to its Monday closing price.
Finnish software company Innofactor also rose 4 percent after it announced plans to merge with Swedish Cinteros AB.
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