The pan-European STOXX 600 <.STOXX> index was up 0.3 percent by 0833 GMT, while blue chips <.STOXX50E> gained 0.2 percent. Britain's commodity-heavy FTSE 100 <.FTSE> index was up 0.5 percent while Germany's DAX <.GDAXI> rose 1 percent.

Financials gave a big boost to the STOXX, with banks <.SX7P> up 0.5 percent, led higher by a 2.8 percent gain in HSBC (>> HSBC Holdings), which rallied after the lender posted a forecast-beating 5 percent rise in first half pretax profit and announced its third buyback in a year.

Results also helped shares in French drugmaker Sanofi (>> Sanofi) gain around 2 percent, after it raised its 2017 outlook on the back of strong sales growth in its second quarter.

As the European second quarter earnings season gathers pace, so far around 45 percent of MSCI Europe firms have reported results, 58 percent of which have either met or beaten analysts’ expectations, according to Thomson Reuters data.

This figure is slightly lower for euro zone firms, of which just over half have met or beaten expectations.

"Earnings season so far has been above average, both in Europe and the UK, although I think there's a bit of distraction - you can see that in the share prices, particularly for the DAX," Ken Odeluga, market analyst at City Index, said.

"Regardless of the fact that you've got a strong business outlook and ... more than satisfactory earnings, shares were falling because investors are trying to factor in the potential impact of this galloping euro on the quarters to come," City Index's Odeluga added.

The STOXX 600 was on track to end the month flat, hampered in July by a stronger euro which has weighed on euro zone firms, especially exporters.

Mining firms <.SXPP> were also strong performers on the day, jumping 1.8 percent as copper prices rose on the back of manufacturing data from China, the world's biggest consumer of metals.

Elsewhere upgrades from RBC on Severn Trent (>> Severn Trent) and United Utilities (>> United Utilities) helped the firms trade at the top of the STOXX, with European utilities <.SX6P> gaining 1 percent.

British tobacco firms Imperial Brands (>> Imperial Brands) and British American Tobacco (>> British American Tobacco) extended losses from the previous session, however, down 3.8 percent and 1.5 percent respectively following Friday's sell-off after the U.S. Food and Drug Administration proposed cutting nicotine in cigarettes.

Shares in Rolls Royce (>> Rolls-Royce) came under pressure following reports that the company told investors that it may not hit its target of 1 billion pounds sterling in cashflow by 2020.

(Reporting by Kit Rees; Editing by Gareth Jones)

By Kit Rees