Hopes that the European Central Bank will cut interest rates on Thursday by 10 basis points to boost economic growth also fed into the positive sentiment. Some expectations still remain that the bank may set the stage for a September cut.

The latest round of corporate results from Swiss bank UBS , Banco Santander and Apple supplier AMS  were positive, and the pan-European stocks benchmark STOXX 600 rose 0.4pc by 0824 GMT.

Auto stocks led gains among major sectors, up 3pc, led by French supplier Faurecia's 7.6pc jump after it maintained first-half profitability.

Car parts supplier Continental rose 4.8pc, and lifted peer Hella, despite issuing yet another warning.

"Conti has warned the market at several occasions in the past 12 months to the extent that expectations have been reset and most of the negatives were already baked in," says Stephane Ekolo, a strategist at Tradition in London.

German carmaker Daimler rose on news that China's Beijing Automotive Group Co Ltd (BAIC) has bought a 5pc stake in the company.

Auto-heavy German stocks rose 0.8pc, the most in Europe.

AMS surged 8.7pc to top the STOXX 600 after it forecast a strong third quarter. This lifted the tech index , as other European chipmakers such as Infineon , ASML and STMicroelectronics rose  between 1.7pc and 3pc.

London's internationally-focused FTSE index took heart from another nudge lower in the pound ahead of the results of a Conservative leadership race which should see Boris Johnson anointed as the next prime minister.

The US Federal Reserve is all but expected to cut rates by a quarter percentage point next week.

"At the moment there is an assumption that the central banks have got everybody's back and that is probably the major reason why the markets are quite bouncy at the moment or seem optimistic," said Russ Mould, investment director at AJ Bell in London.

In Spain, results of the first confirmation vote that could see the country's acting Prime Minister Pedro Sanchez form a government with far-left party Podemos were awaited. The vote, which comes almost three months after an inconclusive national election, is scheduled for 1600 GMT.

Madrid's main index had lost 2.3pc over the last four sessions with political uncertainty being a major weight on sentiment. Santander's 2.4pc rise after results helped the index out of its blues.