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European equities posted modest gains on Tuesday as markets attempted to recover from the previous session’s broad sell-off. Investor sentiment remained cautious, but select sectors such as utilities and banking helped lift the pan-European Stoxx 600 index marginally into positive territory by the close. The index traded just above the flatline, reflecting a day marked by mixed performance across major regional exchanges.

Utilities emerged as one of the strongest performing groups, rising 0.3 percent as investors gravitated toward traditionally stable sectors during periods of volatility. Companies such as Orsted and EDP delivered solid gains, with Orsted climbing 3 percent and EDP ending the session 1.7 percent higher. The sector benefited from a wider shift into defensive assets following global macroeconomic uncertainty earlier in the week.

Banking stocks also played a central role in supporting the European market. The FTSE 350 Banks index rose 1.2 percent after the Bank of England reduced its estimate of capital requirements for U.K. banks for the first time in ten years. The central bank confirmed that all major lenders passed its latest stress tests, which assessed their ability to withstand severe economic shocks. According to the Bank of England, even under worse-than-expected conditions, the U.K. banking system would remain resilient and able to support the economy.

British lenders including Metro Bank and Lloyds Banking Group benefited from the announcement, with Metro Bank gaining 2.6 percent and Lloyds ending roughly 2 percent higher. The news added a layer of stability ahead of key monetary policy decisions in both the United Kingdom and the United States. Investors are closely watching the upcoming U.S. Federal Reserve meeting on December 9-10, where markets are pricing in an 87.2 percent chance of a quarter-point rate cut. The Bank of England is analyzing potential spillover effects, particularly given that nearly half of movements in the U.K. yield curve originate from global developments.

Economists broadly expect the Bank of England to ease rates soon, given slowing inflation, muted economic growth and a cooling labor market. Last week’s Autumn Budget introduced further disinflationary measures, adding to expectations of an upcoming policy shift.

A major corporate story that influenced markets on Tuesday involved German biotech and agricultural giant Bayer. The company’s shares jumped 12 percent after receiving support from the Trump administration in its effort to limit ongoing litigation related to Roundup, the weedkiller acquired through its $60 billion purchase of Monsanto in 2018. Bayer has faced tens of thousands of lawsuits alleging that Roundup exposure caused various health issues, including cancer, leading to billions of dollars in settlements and legal expenses.

U.S. Solicitor General D. John Sauer urged the Supreme Court to restrict the scope of these lawsuits, endorsing Bayer’s argument that federal pesticide regulations should override claims made under state law. Bayer CEO Bill Anderson called the government’s backing an important step for providing clarity to farmers and safeguarding innovation across the agricultural sector. The move was interpreted by investors as a potential turning point in a longstanding legal battle that has weighed heavily on the company’s stock and reputation.

In other corporate developments, Spanish banking group Santander rose 1.5 percent after selling a 3.5 percent stake in its Polish unit Santander Polska for approximately $473 million. Following the sale, Santander retains a 9.7 percent holding in the subsidiary.

Several economic data releases added further context to the day’s market movements. A flash estimate for euro zone inflation showed a slight uptick to 2.2 percent in November, modestly above expectations. In the United Kingdom, retail data from the British Retail Consortium indicated that shop prices declined 0.6 percent year-on-year during the first week of November, led by a continued slowdown in food inflation, which fell from 3.7 percent to 3 percent.

Additionally, Nationwide’s latest House Price Index revealed that U.K. house price growth eased to 1.8 percent annually in November, down from 2.4 percent in October. The average home cost reached £272,998, reflecting a cooling property market amid higher borrowing costs and lower buyer demand.

European markets ended the day cautiously optimistic, supported by strong performances in utilities, improving outlooks for banks and key legal and corporate developments that helped lift sentiment across the region.