By Josie Cox 

European stocks edged higher Friday, reversing a two-session selloff, thanks to a revival in investors' appetite for riskier assets despite lingering geopolitical concerns.

Global stocks had suffered sharp declines over the previous two days, burdened by downbeat economic data in the U.S. and fresh tensions in the Middle East as Saudi Arabia and other Gulf states launched airstrikes against rebel forces in Yemen's capital.

That triggered a rush into assets deemed less risky during times of volatility, such as gold and the yen, and away from stocks. On Friday, however, that move showed signs of unwinding.

Ian Williams, economist and strategist at brokerage Peel Hunt said that the recent selloff should be "attributed to technical and liquidity considerations, rather than any significant shift in the fundamentals." Nick Lawson, a senior equity trader at Deutsche Bank echoed this, saying it was likely a "knee-jerk reaction" triggered by market levels and the news out of Yemen.

The Stoxx Europe 600 index ended the session 0.3% higher while Germany's DAX and France's CAC both rose 0.2% and 0.6% respectively.

London's FTSE 100 was the notable underperformer of the region, weighed in part by a slide in mining stocks on news that Chile's copper mining industry has been hit by torrential rain that has forced the shutdown of some of the world's largest mines.

Yields on so-called peripheral eurozone government bonds also fell marginally, a further sign of a slight pickup in investor appetite for riskier assets.

"Investors have some worries," said global market strategist Kerry Craig at J.P. Morgan Asset Management, adding however, that this is still an environment where asset managers fundamentally want to have exposure to risk assets.

The euro slid against the U.S. dollar in early trade after inching higher during the previous two sessions. By early afternoon, though, it had stabilized before gaining ground against the dollar. Into the end of the session one euro bought just under $1.09.

Still, this represents a loss so far this year to just over 9.5% as a symptom of the stark divergence between monetary policy in the U.S. and in Europe.

"It seems that investors aren't convinced that the pause in the appreciation of the U.S. dollar is anything but temporary," said Tim Ash, an economist at Standard Bank. Morgan Stanley strategists in a note on Friday also recommended buying recent "dollar dips".

Elsewhere, the buck also rose against Japan's yen after figures showed that Japanese consumer prices were flat from a year earlier in February, deepening worries that the country is heading back toward deflation two years after its central bank launched a radical economic-revival program.

Later, it retraced, however to trade flat on the day at Yen119.14.

In the U.S., the S&P 500 crept higher in late European trade after figures showed that gross domestic product, the broadest measure of goods and services produced across the economy, expanded at a seasonally adjusted annual rate of 2.2% in the fourth quarter. That was unchanged from its previous estimate last month.

"Concern is already now on how low [U.S. growth in] the first quarter of 2015 is going to be," strategists at Rabobank wrote in a note.

In commodity markets, Brent crude was trading 2.7% lower at $57.60 per barrel after a sharp rally on Thursday, spurred by the Yemen airstrikes. Gold was 0.4% lower at $1,200 per trout ounce.

Write to Josie Cox at josie.cox@wsj.com