European stocks close higher

European stocks rose Tuesday for the first time in four sessions, as investors viewed the recent selldown related to subprime as overdone.

U.K.'s ICAP paced an advance by financial services stocks after reporting first-half earnings that exceeded expectations. Oil stocks such as StatoilHydro, Total and Royal Dutch Shell rose alongside the price of crude oil.

"Valuations offer significant support," said ABN Amro strategist Ian Richards. "Equity valuations look low when considered either from a long-term perspective, or compared to the norms of the post-2003 era."

The Dow Jones Stoxx 600 Index closed 1.1 percent higher at 358.65. The U.K.'s FTSE 100 Index gained 1.7 percent to 6226.5, while France's CAC-40 Index rose 1.4 percent to 5506.68. Germany's DAX Index closed 1.6 percent higher at 7630.31.

European markets recouped some losses after the renewed credit crunch concerns had sent markets into a downward spiral over the last three sessions.

"At the moment, it's a pretty tricky market, it's hard to know at this point how the year is going to end," said Artemis CEO Mark Tyndall at a conference in London.

The high level of market activity since September has proven beneficial for the world's largest interdealer broker by revenue. The U.K.'s ICAP reported a 34 percent rise in first-half pretax profit from active trading markets and growth in electronic broking. The shares shot up 13 percent.

Oil stocks rebounded alongside rising crude oil prices that topped US$96 a barrel. Statoil Hydro shares closed up 3.7 percent.

Total rose 1.7. Royal Dutch Shell shares climbed 2.8 percent.

However, it wasn't all positive news for stocks Tuesday. Sweden's Ericsson plummeted 11 percent as the company warned that fourth-quarter sales were likely to be in the lower end of its forecast range.

The U.K.'s Northern Rock lost another 9.9 percent after the Times newspaper reported late Monday, without citing sources, that U.S. private equity firm, Cerberus Capital Management has dropped plans to table a bid for the beleaguered bank.

Vodafone, the world's largest mobile phone operator by revenue, said that it has no plans to issue further injunctions against rivals exclusively selling Apple's iPhone, after earlier doing so against Deutsche Telekom's T-Mobile in Germany. Vodafone edged up 1.5 percent to 193 pence.

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Kimberly A. Vlach is a correspondent for Dow Jones Newswires