US data, lower oil lift Europe shares; banks fall

European shares ended higher on Tuesday, snapping a three-day losing streak after data showed a rise in U.S. consumer confidence, though banks limited gains due to worries over more writedowns linked to a credit crisis.

The FTSEurofirst 300 index of top European shares provisionally closed 0.4 percent higher at 1,163.24 points, also helped by a cooling off in oil prices.

Earlier, a higher-than-expected reading on the U.S. consumer sentiment index helped bring about a turnaround for European shares, which fell as much as 1.3 percent earlier in the day.

The consumer index came in at 51.9 for July –the first rise since December — from an upwardly revised 51.0 in June, which was the lowest since a reading of 47.3 in February 1992.

"This confirms a similar reading by the University of Michigan last Friday. Both have seen a severe weakness of late and this bounce indicates that, perhaps, consumer confidence has bottomed out," said Bernard McAlinden, market strategist at NCB Stockbrokers in Dublin.

"It is good news, but only at the margins," he added.

Banks remained a prominent negative weight on the FTSEurofirst 300, with investors spooked by a shock writedown from Merrill Lynch overnight.

The DJStoxx European banks was down 0.5 percent, with UBS UBSN.VX losing 3.6 percent, Barclays dropping 4.1 percent and BNP Paribas down 1.8 percent. The banking index lost as much as 3.6 percent earlier in the session.