Italian shares bounced back, boosting European markets on Wednesday on hopes Italy's goverment would agree with Brussels on the budget deficit target.
The pan-European Stoxx 600 index inched 0.3 percent higher to 382.97.
France's CAC 40 index index rose 0.3 percent to 5,486.73. Italy's FTSE MIB jumped 0.5 percent with the banks index climbing 0.7 percent.
Banking sector was affected by the recent selloffs in the bond market and the index saw its fifth straight day of declines on Tuesday before news the Italian officials were ready to dial back their deficit spending plans.
Shares in Tesco slumped 8.5 percent after the UK's largest retailer posted first-half profits below analysts’ predictions.
Shares of France-based tech consultancy Altran soared 9 percent to 8.12 euros, at the top of the STOXX following recent Kepler Cheuvreux's stock upgrade.