The pan-European STOXX 600 index rose 1.3% after suffering a 1.5% loss in the previous session. Tech stocks gained 2.7% to lead sectoral gains.
Oslo-listed chipmaker Nordic Semiconductor jumped 9.8% to the top of STOXX 600 after an Italian daily reported that Franco-Italian rival STMicroelectronics is mulling an offer to buy the company.
But, Nordic Semiconductor's chief financial officer said the firm had "no knowledge" of any takeover interest from STMicroelectronics.
A rally in economy-linked cyclical sectors on the back of reopening optimism and solid earnings drove the STOXX 600 to record high earlier this month, but inflation worries and a rise in market volatility put the index on course for weekly losses.
"Given we're near a cyclical peak in the real economy and confidence indicators, we want to put some defensive names in order to hedge in what could be a more volatile phase in markets," said Michele Morganti, Generali Investments' senior equity strategist.
Wall Street's main indexes also rose after a three-day slide, helped by gains in technology stocks, as the smallest weekly jobless claims since the start of a pandemic-driven recession bolstered risk appetite. [.N]
German producer prices posted their biggest increase in nearly a decade, in a further sign that supply bottlenecks are leading to increased inflation pressure in Europe's largest economy.
However, Jack Allen-Reynolds, senior Europe economist at Capital Economics said: "once the temporary forces pushing up inflation fade, we expect it to drop back sharply to well below the ECB's target."
In earnings, French conglomerate Bouygues edged up 0.3% after it raised the full-year guidance for its telecoms division and reported a smaller than expected first-quarter core loss.
Deutsche Telekom added 2.5% on raising its medium-term core profit outlook.
Budget airline EasyJet fell 2.1% after it warned that late announcement of travel rules reduced visibility as it reported a wider half-year loss.
UK rail operator Trainline slumped 23.3%, marking its worst day on record, with traders pointing to hit from a reorganisation of Britain's railway system.
(Reporting by Sruthi Shankar and Shreyashi Sanyal in Bengaluru; Editing by Arun Koyyur and Andrew Heavens)
By Sruthi Shankar and Shreyashi Sanyal