The pan-European STOXX 600 index rose 0.6%. Banks, which benefit when interest rates rise, rose 1.1% to hit a fresh one-month high and were among the biggest boosts to the index.
Focus will be on minutes of the U.S. Federal Reserve's previous meeting, due later in the day, to asses the thinking among policymakers on the path for interest rate hikes.
European Central Bank President Christine Lagarde gained key allies for her plan to raise rates out of negative territory this summer, even as one of her own board members expressed some scepticism about the policy path ahead.
"Investors are reassessing continuously the likelihoods of continued tightening by the Fed and other central banks," said Andrea Cicione, head of strategy at TS Lombard.
"What will transpire is that the Fed remains determined to normalize monetary policy. After they've reached what they believe is neutral policy, which might be in the region of 3%, they will reassess. The minutes will confirm that, for now, the Fed is not blinking."
Asian stocks and Wall Street also bounced after a selloff in the previous session. Markets have seesawed this week, with the STOXX 600 index having shed 1.1% in the previous session to give up almost all of Monday's gains.
"The ongoing tragedy of the war in Ukraine, rising inflation, and the corresponding central bank policy reaction have added risk to equity markets and turned clients off investing," said Emma Wall, head of investment analysis and research at Hargreaves Lansdown.
Wall added that daily market volatility will likely remain and diversification of portfolios is the best way to navigate the tides.
Energy and material stocks were among the biggest gainers in Europe. Oil prices rose, buoyed by tight supplies and the prospect of rising demand from the upcoming start of the summer driving season in the United States. [O/R]
Meanwhile, the utilities sector rose 2.0% as power generators recovered from a plunge spurred by worries about a windfall tax.
Power company SSE Plc gained 5.7% after reporting a 23% surge in annual profit.
A survey on Wednesday showed German consumer morale is projected to inch up in June but warned of inflation crimping household spending. This follows data on Tuesday that showed resilience in euro zone business growth amid a slowdown.
Separate data from Germany showed Europe's largest economy grew in the first quarter, dodging a recession.
Swedish medical equipment maker Elekta gained 3.0% on a profit beat.
(Reporting by Susan Mathew and Shreyashi Sanyal in BengaluruEditing by Sriraj Kalluvila and Matthew Lewis)
By Susan Mathew