By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets erased losses and moved higher on Tuesday after Russian President Vladimir Putin signaled he doesn't want to split Ukraine, easing tensions in the crisis that has kept investors on edge recently.

The Stoxx Europe 600 index added 0.4% to 327.11, building on a 1.1% rally from Monday, which marked its biggest advance in almost two weeks.

Banks helped lift the benchmark, with shares of Intesa Sanpaolo SpA up 4% in Milan, BNP Paribas SA up 1.7% in Paris and Banco Santander SA 1% higher in Madrid.

Adding pressure in Europe, Vodafone Group PLC (VOD) fell 0.5% after Fitch Ratings placed the telecoms firm on rating watch negative after the deal to buy Spanish cable operator Ono SA. Fitch said it would likely downgrade Vodafone by one notch if it acquires Ono without taking other measures to reduce debt.

Shares of Scania AB fell 3.5% after an independent committee formed to assess Volkswagen AG's bid for the Swedish truck maker recommended that Scania shareholders reject the offer. Volkswagen shares rose 0.4%.

Resolution Ltd. slumped 5.1% after the insurance firm swung to profit but said founders Clive Cowdery and John Tiner will step down. The founders steered the company through a restructuring phase that is now complete.

More broadly, European stock indexes reversed midday after Putin said Russia wishes no harm to Ukraine and isn't seeking a partition of the country. Some analysts were worried that Russia would try and take over larger parts of Ukraine after gaining control of the Crimea region. Putin also took another step toward annexing Crimea, brushing off Western sanctions.

Ahead of the speech, U.K. Foreign Secretary William Hague urged Russia to begin talks with Ukraine to resolve the issue over Crimea and said "continuing to ignore those calls will bring serious consequences for Russia." The EU and the U.S. on Monday imposed visa bans and asset freezes on Russian and Crimean officials linked to the unrest in the region.

Russia's MICEX Index rose 1.7% to 1,307.63.

Elsewhere in Europe, Germany's DAX 30 index picked up 0.5% to 9,222.87, while France's CAC 40 index jumped 0.8% to 4,304.31. The U.K.'s FTSE 100 index added 0.2% to 6,581.51.

Aside from the Ukraine-Russia standoff, the markets looked to fresh macroeconomic data on the euro zone. Eurostat said the currency union had a surplus in their trade of goods with the rest of the world in January, an indication that the region's economic recovery continued at the start of the year.

Investors also digested the March ZEW survey that measures German investor confidence. The indicator of economic sentiment slid 9.1 points to 46.6, missing analyst expectations of 52 and marking a third straight month on the decline. ZEW President Clemens Fuest said the "Crimea crisis is weighing on experts' economic expectations for Germany," but stressed that the economic upswing is not at risk.

More must-reads from MarketWatch:

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