Semiconductor stocks tracked their U.S. peers higher as Microchip Technology raised its third-quarter sales outlook. The technology index <.SX8P> rose 1.3%, the most among European sub-sectors. [.N]
A more than 4% gain for Infineon Technologies helped Germany's DAX rise 0.8% while STMicroelectronics 2.5% gain lifted Italian stocks by 0.6%.
The pan-regional STOXX 600 index finished a volatile session 0.2% higher after falling in the past two sessions following the killing of a top Iranian commander in Baghdad last week by the United States.
The benchmark index is 0.4% below its record high hit on December 27.
"Relative to the potential political and humanitarian consequences of an escalating conflict between Iran and a U.S.-Saudi alliance, markets have reacted fairly calmly so far," wrote Berenberg economist Holger Schmieding in a note.
Oil prices surrendered some of their recent gains, pressuring London's energy-heavy FTSE 100 index.
Auto stocks also shone after British carmaker Rolls-Royce marked a 25% jump in 2019 sales, giving some comfort to a sector that has been plagued by slowing global demand.
Shares of Rolls-Royce owner BMW rose 1.6%.
On the other hand, luxury British carmaker Aston Martin plunged about 16% after it warned its 2019 profits would almost halve due to weak European markets.
The stock was the biggest loser on the London's mid-cap index.
Spanish stocks lagged as Socialist leader Pedro Sanchez secured parliamentary backing by a tight margin to form a coalition government, following two inconclusive national elections last year.
But without a solid majority in parliament, the coalition may struggle to pass legislation and will need to negotiate with other parties on a case by case basis.
"The Spanish economy could probably cope with a weak left-left coalition that fails to get much done. Spain may gradually cease to outperform the remainder of the Eurozone," Schmieding added.
By Medha Singh
