European shares opened higher with the beaten-down banking sector providing the biggest boost while reports of takeover sent Osram to a record high.

The Stoxx 600 index rose 0.3 per cent, rebounding from a fall in the previous session when worries that the European Central Bank might wind down the pace of bond-buying before the end of its asset purchase programme hit both shares and bonds.

European banking stocks extended their gains from the previous session, with Deutsche Bank rising 1.7 per cent after German officials said the government was pursuing discreet talks with US authorities to help the lender secure a swift settlement over the sale of toxic mortgage bonds, according to sources in Berlin.

Unicredit shares rose 4 per cent. Both Deutsche Bank and Unicredit have roughly halved in value this year.

Osram jumped 10 per cent, hitting a record high on reports of a takeover offer from Chinese chipmaker Sanan Optoelectronics.

Meanwhile, budget airline EasyJet was the biggest laggard, down more than 6 per cent after saying its annual profit would fall by more than 25 per cent this year, its first drop since 2009, hit by disruption, security concerns and exchange-rate headwinds. – (Reuters)