European Shares Witness a Temporary Recovery

European shares rose on Tuesday as the banking sector recovered from a weeks-long crisis, but market sentiment was low after Moscow warned against cutting gas supplies to the continent.

The pan-European Stoxx 600 index rose 0.8 percent, with banking shares gaining 3.6 percent, after hitting a one-year low in the previous session. The services sector provided 3.2 percent.

Fears of a severe supply crunch have sent crude oil prices up to $127 a barrel and fueled concern about inflation stifling economic growth.

The Stoxx 600 is down nearly 14 percent since the start of the year, retreating from record highs hit in January as the Ukraine crisis threatens to derail an economic recovery.

Russian Deputy Prime Minister Alexander Novak said that his country may cut off gas supplies through the Nord Stream 1 pipeline to Germany, but it has not taken such a decision yet.

Shares of Raiffeisen Banks, Societe Generale and UniCredit rose between 6.8 percent and 10.1 percent, after being hurt in recent weeks due to concerns about their exposure to Russia, as well as reduced expectations of an interest rate hike by the European Central Bank.

French food group Danone rose 0.8 percent after unveiling measures to boost revenue growth.