Shares in drug maker AstraZeneca leapt on reports it has been approached by Pfizer about a potential takeover, adding to a buoyant postholiday tone in European markets early Tuesday.

The Stoxx Europe 600 index was 0.7% higher in early trade. Pharmaceutical shares led the way, with AstraZeneca climbing 8% and GlaxoSmithKline, Shire, and Novartis also posting hefty gains.

The strong start to the week in Europe followed two sessions of gains for Wall Street on Friday and Monday, led by a continued rebound in technology stocks.

Asian stocks were mixed, with Japan's Nikkei giving up early gains to close 0.9% lower.

Global stocks have rebounded from last week's lows as investors grow less concerned about tensions in Ukraine, and taken modest encouragement from the start of the U.S. first-quarter earnings season.

Even so, Ukraine concerns continue to linger as cracks appear in the agreement struck last week in Geneva between Russia and the West, with both sides trading charges of violating the deal.

"Geopolitical issues in Ukraine continue to cast a shadow on sentiment," said analysts at Crédit Agricole.

Foreign-exchange markets were largely quiet Tuesday, with the yen recovering part of its overnight losses against the dollar.

In commodities markets, gold was unchanged at $1,290.30 an ounce, and Brent crude oil was steady at $109.93 a barrel.

The Pfizer approach was reported over the weekend by the U.K.'s Sunday Times, which said informal conversations about a possible tie-up had taken place between the companies in recent weeks, and that AstraZeneca had knocked back approaches that could value the company at $101 billion.

Pfizer and AstraZeneca declined to comment on the reports.

Write to Tommy Stubbington at tommy.stubbington@wsj.com

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