Europe close: Stocks bounce back as traders wait on OPEC

European stocks rose on Wednesday, boosted by stronger oil prices and decent gains in the banking sector as Deutsche Bank recovered from recent losses.

The benchmark Stoxx Europe 600 index gained 0.70% to 342.57, while Germany’s DAX advanced 0.74% to 10,438.34 and France’s CAC 40 added 0.77% to end the session at 4,432.45.

Crude oil futures were firmer as investors kept an eye on the OPEC meeting in Algeria, with West Texas Intermediate up 2.32% to $45.73 a barrel and Brent crude up 2.81% to $47.30. Prices were underpinned by data from the US Department of Energy revealing a fall in commercial oil stockpiles of 1.9m barrels in the week to 23 September.

Furthermore, reports referencing Libyan officials surfaced after the closing bell in London which indicated that OPEC producers might yet reach an agreement between them on Wednesday, sending crude oil futures higher.

A recovery in Deutsche Bank shares helped to underpin the tone following two days of heavy losses, after chief executive John Cryan reassured investors that the bank had not asked for state aid to help settle a $14bn fine from the US Department of Justice over the mis-selling of mortgage-backed securities.

The Stoxx 600 banks index gained 0.57%.

The recovery also came as the German lender’s wholly-owned subsidiary Deutsche Holdings agreed to sell Abbey Life to Phoenix Group for £935m in cash.

Commenting on Wednesday's events, Capital Economics's Jennifer McKeown said: "Today’s relatively positive news about Deutsche Bank adds to the evidence that it is not the next Lehman Brothers for the global financial system and that its troubles are unlikely to trigger a German recession. But recent developments have highlighted the fragility of the euro-zone banking sector yet again and suggest that weak lending growth will continue to weigh on the region’s prospects."

Royal Bank of Scotland was in the black after it agreed to pay $1.1bn (£846) to settle two legal claims that it allegedly mis-sold mortgage securities in the run-up to the 2008 financial crisis.

Deutsche Post edged higher after announcing an agreement to buy integrated mail and parcel operator UK Mail Group for 440p per share, valuing the company at £242.7m. UK Mail surged 43% on the news.

TUI rallied after the travel firm upped its 2015/2016 profit guidance.

Investors were also digesting comments from European Central Bank chief Mario Draghi who said in a speech opening an ECB research conference that Eurozone governments should implement growth-boosting overhauls to allow interest rates to rise safely above zero.

Draghi said: "We know that if interest rates are to rise safely away from the lower bound, we need structural reforms to raise potential output in the euro area and boost long-run interest rates.”

Later in the session, during testimony to the US House of Representatives' Financial Services Committee, Fed chief Janet Yellen indicated that should things continue on their current course then policy accommodation will need to be removed, albeit "probably not that much".