Europe close: Stocks buck early losses to finish higher, banks gain

European stocks bucked overnight losses on Wall Street and Asia to rally on Tuesday, helped by better-than-expected readings for key surveys on services activity on both sides of the Pond.

That served to send all major regional bourses in Europe higher, although some economists cautioned that the impact of supply constraints and cost rises on euro area business confidence augured poorly for the outlook.

The pan-European Stoxx 600 index gained 1.17% to 456.03, alongside a 1.95% jump on Milan's FTSE Mibtel to 25,956.02 and as the Dax in Frankfurt put on 1.05% to 15,194.49.

Ten-year German Bund yields and Brent crude oil futures were higher but the euro and gold futures were slightly lower.

Tech stocks sold off overnight during Asian trading hours as investors got jittery over rising US Treasury yields, but the Stoxx 600 sector gauge added 2.24%, while that for lenders' shares ended the day up by 3.5%.

More generally, Asian stocks fell on persistent worries about slowing growth in China.

Tech heavyweights Apple, Alphabet, Amazon and Microsoft all fell at least 2% while shares in Facebook slipped 4.9% after the social media platform and its WhatsApp and Instagram affiliates crashed for several hours due to technical issues.

In economic news, business growth in the euro zone during September held up, but was hit by ongoing supply-chain problems and increased inflationary pressures which show no sign of easing, a survey showed on Tuesday.

IHS Markit’s final composite Purchasing Managers’ Index (PMI), used as guide to gauge economic health, sank to 56.2 (consensus: 56.3) last month from 59.0 in August.

"Although for now the overall rate of expansion remains relatively solid by historical standards, the economy enters the final quarter of the year on a slowing growth trajectory. A drop in business confidence to the lowest since February adds further downside risks to the outlook," said IHS Markit chief business economist Chris Williamson.

Elsewhere, France's industrial production increased in August, beating forecasts despite supply shortages, according to data released by the country's statistics agency Insee. Total industrial output--comprising output in manufacturing, energy and construction--rose 1.0% in August compared with July.

In equity news, Greggs – renowned for its range of sausage rolls – rose to the top of the Stoxx, gaining over 11% after lifting full-year guidance on the back of a strong sales performance in the third quarter, although it also warned over inflationary pressures.

The company said two-year like-for-like sales were up 3.5% in the third quarter despite staffing and supply chain disruption. Shares in other food providers also rose, with HelloFresh, Deliveroo and Just East Takeaway all higher.

Infineon Technologies was up 5.1% after it confirmed its 2021 revenue and said it expects results to rise further next year as demand for power chips for cars, datacenters and renewable power generation soars.

Shares in Denmark's GN Store Nord fell 7% as the firm cut its 2021 revenue growth forecast for its hearing aid unit to around 16% from 25% citing postponed product launches.

"GN Hearing is currently experiencing delays in product development deliverables leading to postponement of key product launches planned for H2 2021," it said.

Aerospace and motoring engineer Melrose slipped roughly 1% after saying it expected the global shortage of semi-conductors to hit its automotive division following a sharp rise in customer cancellations in the first quarter.