European equities inched closer to fresh record highs on Tuesday as a sustained fall in global crude oil prices eased inflation concerns and lifted shares across the continent.

The pan-European STOXX 600 advanced 0.9%, while Germany's DAX, France's CAC 40, Italy's FTSE MIB and Spain's IBEX 35 each rose roughly 1.3%. London's FTSE 100 added 0.7%.

Broad gains across Europe

European stocks opened firmly higher, with France's CAC 40 rising 1.20%, Germany's DAX advancing 1.14% and Italy's FTSE MIB gaining 1.20% in early trading. Britain's FTSE 100 rose 0.73% at the open.

The gains carried over the positive momentum from Monday, when the STOXX 600 gained 1.26%, the DAX advanced 1.73% and the FTSE 100 rose 1.02%. The rebound follows last week's technology-led sell-off, with investors returning to shares linked to artificial intelligence and to banks and industrial companies.

Oil slide eases inflation fears

Benchmark Brent crude slipped another 1% during the session to $91.56 a barrel, its lowest level since early September and comfortably below the $100 mark. The fall came as US President Donald Trump downplayed the prospect of further military action against Iran, easing concerns about Middle East oil supplies.

Lower oil prices are easing inflationary pressure and improving the backdrop for risk assets, giving central banks more room as they weigh the path of interest rates. West Texas Intermediate crude also fell, to around $84.70 a barrel.

Banks and industrials lead

Financials and selected industrials led the advance. UniCredit rose 3.7%, while Deutsche Bank, Rheinmetall and Safran gained around 3.4% to 3.5%. Banks including Intesa Sanpaolo, Santander and BNP Paribas all traded higher, suggesting investors are favouring sectors sensitive to yields and the economic outlook.

Energy shares were among the weaker areas, in line with the decline in oil prices, while technology was more mixed, with chipmaker Infineon higher but SAP under pressure.

US inflation test ahead

The next major test for the rebound will be US consumer price data for October, due at 1330 GMT. Headline inflation is expected to slow to 0.3% month on month in October, down from 0.6% in September, while annual inflation is forecast to accelerate to 3.9%.

The reading is the last before the Federal Reserve meets on 9 December and could determine whether lower yields and improving risk appetite prove sustainable. Fed official Christopher Waller has signalled that a rate hike of as much as 50 basis points could be needed after the December meeting if October inflation comes in materially above expectations.

For now, European markets are enjoying a broad relief rally, with gains spread across most major indices rather than driven by a handful of large stocks.