European shares ended higher on Wednesday, supported by commodity-linked stocks which rose on hopes of more stimulus in major importer China, while easing bond yields took pressure off the technology sector.
The pan-European STOXX 600 index closed up 0.7%, with the basic resources and energy sectors up 3.2% and 2.3% respectively.
Commodity prices rose after sluggish factory-gate inflation data in China showed more room for policy easing, which is likely to see the central bank release more money into the economy.
Bets on fast US policy tightening slimmed after Fed Chair Jerome Powell said it may take several months to make a decision on reducing the Fed's $9 trillion holding. US inflation data also came in line with expectations for December, although the figure remained around 40-year highs.
"Powell's speech had no surprises, so yields haven't risen further. When you have yields stabilising, growth names are back," said Roland Kaloyan, head of European equity strategy at Societe Generale.
Bond yields on both sides of the Atlantic retreated, allowing technology stocks to extend their recovery into a second day. The sector rose 1.5%.
The STOXX 600 had logged its best day in nearly three weeks on Tuesday as technology stocks snapped a seven-day losing streak, while investors looked ahead to a positive fourth-quarter earnings season.
Profit for companies listed on the STOXX 600 is expected to rise 48.5% in the fourth quarter to 108.7 billion euros ($123.5 billion) from a year earlier, a slight dip from the prior estimate of 49.3%, Refinitiv data showed.
"Overall it should be another good season, but several companies communicated a lot of the good in 2021. What could be a catalyst for the market is going to be the guidance for 2022," Societe Generale's Kaloyan added.
Among individual stocks, German software company TeamViewer surged 14.9% after announcing upbeat preliminary fourth-quarter and full-year results.
French cloud computing company OVHcloud climbed 4.6% following a 13.9% rise in first-quarter revenue and said it was on track to achieve its full-year targets.
Just Eat Takeaway.com, Europe's largest meal delivery company, inched 3.6% higher after posting a 14% increase in orders in the fourth quarter and maintained its financial forecasts for 2022.
Dutch firm Philips plunged 15.5% after saying it expects fourth-quarter core profit to drop around 40%, hit by a global shortage of parts and a recall of ventilators.