• European investors are closely watching movements in the U.S. bond market after the benchmark 10-year Treasury yield touched a high of 1.567%.
• Fed Chairman Jerome Powell, ECB President Christine Lagarde and Bank of England Governor Andrew Bailey are speaking at an ECB forum on Wednesday.
• Dutch semiconductor equipment maker ASML climbed 4.2% after projecting double-digit growth on the back of an increase in chip usage.

LONDON — European stocks closed higher on Wednesday, looking to shrug off market nerves after rising U.S. bond yields led to a sell-off in the previous session.

The pan-European Stoxx 600 provisionally closed up 0.7%, after losing as much as 2% Tuesday. Autos added 1.6% to lead gains as most sectors and major bourses swung into positive territory.

Inflation prospects and bond yields are in focus after a turbulent start to the week.

European investors are closely watching movements in the U.S. bond market after the benchmark 10-year Treasury yield touched a high of 1.567%, prompting tech shares to lead the broader markets lower.

Rising bond yields tend to hurt growth stocks, including tech stocks, because they lower the relative value of future earnings, and make popular stocks appear overvalued.

In Asia, stocks mostly fell overnight following a tumble on Wall Street. Stateside, stocks were slightly higher as the rapid increase in the 10-year yield cooled.

Traders remain focused on central banks, with U.S. Federal Reserve Chairman Jerome Powell, European Central Bank President Christine Lagarde, Bank of Japan Governor Haruhiko Kuroda and the Bank of England's Governor Andrew Bailey all speaking at the ECB Forum on Central Banking on Wednesday. Powell is due to speak at 11:45 a.m. ET.

EU economic sentiment improved in September after declining in August, as optimism rose among consumers and the industrial and construction sectors, official data revealed Wednesday. The European Commission's economic sentiment index hit 117.8 in September from 117.6 in August, following a record high 119.0 in July.

In terms of individual share price movement, Dutch semiconductor equipment maker ASML climbed 3.9% after projecting double-digit growth on the back of an increase in chip usage. Deutsche Bank raised its price target for the stock on Wednesday morning.

At the bottom of the Stoxx 600, Royal Mail fell 8.8% after UBS downgraded the stock to "sell" from "buy" and cut its price target.

Enjoyed this article?
For exclusive stock picks, investment ideas and CNBC global livestream
Sign up for CNBC Pro
Start your free trial now

- CNBC's Ryan Browne, Tanaya Macheel and Eustance Huang contributed reporting to this story.