This is CNBC's live blog covering European markets.

European markets closed higher on Tuesday as investor nerves settled after UBS' takeover of rival bank Credit Suisse.

The pan-European Stoxx 600 index closed 1.3% higher, while most sectors closed in the green. Financial services led gains, up 4.4%, as the banking sector climbed 3.8%. Insurance stocks were up 2.9%.

On Monday, European markets fluctuated, with the Stoxx 600 lower in the first hours of trade before moving into positive territory.

UBS agreed on Sunday to buy rival Credit Suisse for 3 billion Swiss francs ($3.2 billion) in an emergency rescue deal. The combined bank will have $5 trillion of invested assets, according to UBS. Credit Suisse shares plunged 54% on Monday at one point, while UBS climbed from losses to a 3.8% gain.

Credit Suisse shares were choppy on Tuesday, and closed up 7% in the afternoon. UBS was 12% higher.

European banks are likely to reman skittish despite added confidence, Emma Wall, head of investment analysis and research at Hargreaves Lansdown, said by email.

"ECB indicators from last week suggest further rate rises to come  – a delicate balancing act in order not to push the eurozone into recession. The banking sector is most sensitive to economic stability so growth indicators will be key to watch," Wall added.

The European Central Bank hiked rates by 50 basis points last week. On Monday, ECB President Christine Lagarde said that while recent financial sector turmoil may help dampen inflation, interest rate rises would remain its primary tool in bringing down prices.

On Tuesday afternoon, the yield on two-year German government bonds was up 24 basis points to 2.56%. It is on course for its biggest daily increase since September 2008, according to Reuters data.

The 10-year yield was up 17 basis points to 2.27%.

"We're seeing a decrease in contagion risk as measured by various market indicators and this is allowing the market to focus back on future rate hikes," Antoine Bouvet, head of European rates strategy, told CNBC.

"This is particularly true of the ECB after a barrage of hawkish comments this week. So it makes perfect sense for Germany yields to continue rising, especially at the short-end."

Markets are bracing for the Federal Reserve's two-day monetary policy meeting, which begins Tuesday. Traders are pricing in an 85% chance of a quarter-point rate hike, according to CME Group's FedWatch tool.

U.S. stocks were higher after U.S. Treasury Secretary Janet Yellen said Tuesday morning the government is ready to provide further guarantees of deposits for crisis-hit banks.

Just Eat Takeaway moves to self-employed model; 1,700 jobs to be affected

Takeaway delivery service Just Eat announced it would be changing the employment model it currently uses in some parts of the U.K., which will result in 1,700 redundancies.

Just Eat will instead rely on gig economy workers, or a self-employment model, which is already in place across most of the U.K.

A spokesperson for Just Eat Takeaway.com said in a press release: "Our top priority now is to support impacted employees and couriers. We are hugely grateful to our talented colleagues and couriers who have been part of the worker model in the UK."

The company returned to profitability in 2022 with an adjusted EBITDA of 19 million euros ($20.5 million) after a 350 million euro loss in 2021.

Shares of Just Eat were down 0.1% around 3.55 p.m. London time.

— Hannah Ward-Glenton

European banks extend gains: UBS up 8%, Commerzbank up 7%

European banks extended their gains at the top of the Stoxx 600 index Tuesday afternoon, with UBS having gained more than 8% around 2.30 p.m. London time.

Commerzbank was up 6.8% while UniCredit gained 6.7% as investors continued to digest news of the UBS acquisition of Credit Suisse.

Banco Sabadell gained 6.7%, while Natwest Group was up 5.8%.

— Hannah Ward-Glenton

European stocks maintain strong gains

The European stock rally continued into the afternoon, with the Stoxx 600 up 1.7%, the U.K's FTSE 100 and Germany's DAX both up nearly 2%, and France's CAC 40 up 1.8%.

All sectors had remained in positive territory through the session as of 2 p.m. in London, with banks up 4.3%, financial services up 3.6%, oil and gas up 3.4% and insurance up 3.1%.

UBS Group was the top riser among stocks, up 7.8% following its acquisition of Credit Suisse.

Other banks near the top of the pan-European index included Commerzbank, UniCredit, Natwest, Barclays, Standard Chartered and Deutsche Bank.

— Jenni Reid

U.S. stocks open higher on Tuesday

Here's how the major U.S. indexes opened: 

• The S&P 500 was recently up 1.1%
• The Dow Jones Industrial Average gained 333 points, or 1.05%. 
• The Nasdaq Composite added nearly 1%. 

Investors are showing optimism after Treasury Secretary Janet Yellen said Tuesday morning that the government is willing to backstop more bank deposits if necessary.

— Pia Singh

The job of bank regulators is to protect the public, not shareholders: Economist

Carl Weinberg, chief economist and managing director of High Frequency Economics, says "while I feel bad about all these CoCos and AT1s who are losing their money … this is what the system was designed to do."

European bond yields rise as market calms

European yields ticked higher on Tuesday, amid a pick-up in investor optimism and with eyes on the start of the Federal Reserve's monetary policy meeting.

The benchmark Germany 10-year bond yield was up 17 basis points to 2.267% by early afternoon, with 2-year yields higher by 24 basis points.

The 10-year yield fell to a 13-week low of 1.923% on Monday, Reuters reported, as markets processed the UBS acquisition of Credit Suisse and news that major central banks were working with the Federal Reserve to boost dollar liquidity.

Italy's 2-year yield was up 13 basis points, while the yield on short-dated U.K. gilts added 8 basis points.

Yields move inversely with prices.

— Jenni Reid

Decision to wipe out Credit Suisse bonds ‘most likely’ politically motivated, bondholder says

David Benamou, chief investment officer at Axiom and Credit Suisse AT1 bondholder, discusses the controversial decision by Swiss authorities to write down $17 billion of AT1s as part of the bank's emergency sale to UBS.

UK posts larger deficit than expected

The U.K. recorded a £16.7 billion ($20.4 billion) budget deficit for February, the biggest loss for the month since records began in 1993.

Spending was higher in part due to the continued program of energy bill support being provided to businesses and households. Last February's figure was £7.1 billion.

A poll of Reuters economists had expected public sector net borrowing, which excludes state-owned banks, of £11.4 billion.

But total tax receipts were also higher, coming in at £77.8 billion versus £72.8 billion last year.

Ruth Gregory, deputy chief U.K. economist at Capital Economics, said in a note that the full-year deficit was likely to come in below the official forecast of £152.4 billion, or 6.1% of GDP, and changes to student loan payments had not yet been accounted for.

This could give the treasury "more money to play with" in the next fiscal statement in the autumn, though turmoil in the banking sector could deepen broader economic concerns.

Samuel Tombs, chief U.K. economist at Pantheon Macroeconomics, said the ruling Conservative party would likely be tempted to loosen fiscal policy before the next election, expected in 2024.

— Jenni Reid

European banks up 3.6%

The European banking sector was up 3.6% at 9:50 a.m. London time, despite concerns over the wipe-out of Credit Suisse AT1 bondholders' investments.

Stoxx 600 banks are down 13.06% in the month to date, according to Eikon data, amid the collapse of two U.S. banks, a sell-off of U.S. regional banks and the UBS buy-out of Credit Suisse.

EU and U.K. regulators on Monday said that they would maintain the established order of equity instruments being first to absorb losses, as they attempted to prevent a market rout.

Russ Mould, investment director at AJ Bell, said that the lack of fresh troubles in the banking sector over the last 24 hours had given markets hope that the crisis may have peaked — but nerves could be shaken up again by the Federal Reserve monetary policy decision due out Wednesday.

— Jenni Reid

Strategist: I don’t buy the argument that we have major systemic risks building in banking system

Bob Parker, senior advisor at International Capital Markets Association, says "the situation today is totally different from that of 2008."

Credit Suisse inches lower; UBS extends gains

While the European banking sector posted strong gains Tuesday morning, there was no such relief for Credit Suisse's battered share price, which fell 1.75% after yesterday's 56% loss.

UBS Group, which moved from losses to slight gains yesterday, was up 3.7%.

— Jenni Reid

European stock markets open higher

Europe's Stoxx 600 was up 0.8% shortly after the open, with banks shaking off recent worries to lead gains with a 1.85% rise.

With all sectors posting gains, auto stocks were up 1.25% and financial services rose 1.23%.

France's CAC 40 was up 1.1% despite domestic turmoil after the government survived a vote of no confidence on Tuesday. Germany's DAX was up 0.9%, while the U.K.'s FTSE 100 rose 0.7%.

— Jenni Reid

Asia-Pacific shares higher

Asia-Pacific markets were higher Tuesday, taking cues from gains in U.S. stocks.

In Australia, the S&P/ASX 200 rose 0.82%, while South Korea's Kospi was up 0.36%.

Hong Kong's Hang Seng index was up 0.93%, with the Hang Seng Tech index higher by 1.73%. In mainland China, the Shanghai Composite was up 0.49%, while the Shenzhen Component advanced 0.5%.

Markets in Japan are closed for a holiday.

CNBC Pro: RBC names 5 global financial stocks to buy right now as banks sell off

The recent share price falls in European financial institutions have presented a buying opportunity, according to RBC Capital Markets.

The investment bank named five stocks to buy during the share price dip, noting that these financial institutions are not the type ever to face a bank run.

CNBC Pro subscribers can read more here.

— Ganesh Rao

European markets: Here are the opening calls

European markets are set to open in positive territory Tuesday.

The U.K.'s FTSE 100 index is expected to open 16 points higher at 7,418, Germany's DAX 92 points higher at 15,020, France's CAC 33 points higher at 7,051 and Italy's FTSE MIB up 104 points at 25,537, according to data from IG.

Earnings are set to come from RWE and on the data front, Germany's ZEW survey of economic sentiment will be released, as will new car registration data for several European countries.

— Holly Ellyatt

CNBC Pro: Goldman’s Oppenheimer says stocks will stay ‘fat and flat’ — and reveals how to trade it

Fears of contagion in the banking sector may have subsided with a rescue deal for Credit Suisse, but Goldman Sachs Chief Global Equity Strategist Peter Oppenheimer believes stocks are not out of the woods yet.

"Even if markets rebound from current levels in the short term, high uncertainty and lowered confidence levels are likely to mean an ongoing 'fat & flat' market given that valuations do not look particularly attractive," he said.

Pro subscribers can read more here.

— Zavier Ong

CNBC Pro: JPMorgan vs. Bank of America? Analysts say one of the stocks is set to soar 50%

It's not just regional bank shares that have been hit by the recent banking crisis — large-cap bank stocks have also tumbled.

But some analysts say the selloff is overdone.

Kenny Polcari, chief market strategist at SlateStone Wealth, described the pullback as "an opportunity for those that have a strong stomach," referring to stocks such as JPMorgan, Bank of America, Citi and Wells Fargo.

For those looking to invest, CNBC Pro takes a look at what analysts are saying about JPMorgan Chase and Bank of America in particular.

CNBC Pro subscribers can read more here.

— Weizhen Tan