Frankfurt-listed shares had briefly dipped into the red in early trade after Germany's economy ministry pointed to weakness in the manufacturing and services sectors, suggesting a subdued second quarter for Europe's largest economy.
The DAX index ended 0.52pc higher, however, with investors counting on the European Central Bank to signal further easing of monetary policy at a meeting next week given slowing growth.
"The markets rebounded as investors realised this affirms a growing conviction the ECB is getting ready to tee-up looser monetary policy," Stephen Innes, managing partner at Vanguard Markets Pte, wrote in a note.
The pan-European STOXX 600 rose about 0.4pc in a choppy trading session, with sectors exposed to trade headlines including automakers, chemicals and basic resources companies topping gains.
Buoying risk sentiment was data from China that showed factory output and retail sales topped forecasts in June. Although economic growth slowed to 6.2pc in the second quarter, its weakest pace in at least 27 years, it was in line with analysts' expectation.
"The June data... is an imminent upturn, markets seem to be growing a bit more confident that the stimulus we've seen from Chinese authorities over the past six to nine months is actually working its way through the system," said Florian Hense, European economist at Berenberg in London.
Regional chipmakers gained after a senior US official said the United States may approve licenses for companies to re-start new sales to blacklisted Chinese telecoms equipment maker Huawei in as little as two weeks.
Infineon, ASM and STMicroelectronics rose between 0.6pc and 3.7pc.
Shares of Belgian-Dutch biotech firm Galapagos NV jumped 19pc to a record high after US drugmaker Gilead Sciences Inc said it would invest $5.1 billion in the company.
Banking stocks ended flat, drawing little cheer from US lender Citigroup Inc's better-than-expected results, as Italian banks dragged.
Investors will turn to earnings from heavyweights in Europe, with technology major SAP, semiconductor player ASML and drugmaker Novartis among those due to report second-quarter results this week.
Companies listed on the pan-European STOXX 600 index are expected to report 0.8pc earnings growth in the second quarter, down sharply from an estimate of 1.8pc a week ago, according to data from I/B/E/S Refinitiv.
Falling the most of the STOXX 600 was shares of British software company Micro Focus, which fell 5.7pc on news its executive chairman sold 11.6 million pounds of the company's shares.
Meanwhile, Anheuser-Busch InBev dropped after it pulled the planned listing of its Asia Pacific unit in Hong Kong, Budweiser Brewing Company APAC Ltd, in what would have been the world's biggest initial public offering of 2019.