LONDON: European stock markets ended higher for a second day running on Tuesday, staging a tentative rebound from last week's losses after positive earnings and a bank rescue in Portugal.
Frankfurt's main DAX index rose 0.39 percent to end the day at 9,189.74 points, compared with Monday's close.
London's benchmark FTSE 100 index inched up 0.07 percent to 6,682.48 points, while in Paris the CAC 40 added 0.37 percent to 4,232.88 points.
Tuesday's trading "appears to suggest fears of a greater market sell-off are easing, as uncertainties surrounding the Portuguese banking system subside," said Craig Erlam, a market analyst at Alpari traders.
European stock markets had risen on Monday after news of a Portuguese state rescue for Banco Espirito Santo.
Optimism was also stoked on Tuesday by news that Vivendi is selling its Brazilian telecom unit for 6.7 billion euros ($9 billion) and better-than-expected earnings after a heavy selloff last week.
Eurozone retail data, which showed sales volumes rose by 0.4 percent in June, pushing the annual growth rate "to a healthy 2.4 percent, the strongest growth rate since March 2007," also cheered the market, said Michael Pearce at Capital Economics.
But bank shares in southern Europe posted heavy losses as investors cut their exposure to the region.
Spain's Bankinter dropped 4.32 percent, while Italy's Intesa SanPaolo fell 2.42 percent and Banco Popolare tumbled 4.23 percent.
Earlier gains were also trimmed by losses on Wall Street following a disappointing report on the Chinese service sector and a warning by US retail giant Target of poor earnings.
In mid-afternoon trading, the Dow Jones Industrial Average dipped 0.47 percent to 16,491.25.
The broad-based S&P 500 dropped 0.47 percent to 1,929.88, while the tech-rich Nasdaq Composite Index declined 0.44 percent to 4,364.75.
BES hits Credit Agricole:
Credit Agricole SA reported that net profit plunged to 17 million euros in the second quarter, from 696 million euros a year ago, hit by the collapse of BES.
The French bank said it had been "deceived" by the family behind BES group of companies, and would back any legal action by a new management team at the Portuguese bank.
Portugal narrowly averted a national disaster and a possible fresh eurozone crisis by launching a new bank as part of a rescue for BES. The bailout, totalling nearly 5.0 billion euros, is being overseen by the Portuguese central bank.
Credit Agricole wrote off its entire 14.6-percent share in BES, saying the disaster cost it 708 million euros.
But the French bank's share price ended up 2.19 percent as investors cheered its underlying performance, which does not take into account the losses caused by BES.
French media group Vivendi jumped 3.62 percent after announcing it had received a firm bid worth 6.7 billion euros for its Brazilian telecom subsidiary GVT from Spanish group Telefonica.
The Spanish firm slid 1.71 percent. InterContinental Hotels Group slumped 3.26 percent after the owner of Holiday Inn brand reported a slide in profits for the first half of the year.
BMW shares rose 0.10 percent after the German carmaker reported a 27.2 percent rise in bottom-line net profit to 1.77 billion euros in the second quarter.
Asian stock markets closed lower after an HSBC report showed the performance of China's service sector fell to a record low in July, and despite the positive lead from Wall Street.
"Chinese equities have had a good run of late and perhaps this could lead to some profit taking in the near-term," said Stan Shamu at IG Markets.
In foreign exchange trading, the euro fell to $1.3367 from $1.3421 late in New York on Monday.
The European single currency dropped to 79.23 pence from 79.59 pence on Monday. The pound rose to $1.6870 from $1.6862.
On the London Bullion Market, the price of gold slipped to $1,284.75 an ounce from $1,290.50.
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