By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets turned 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 0.6% to close at 327.93, building on a 1.1% rally from Monday, which marked its biggest advance in almost two weeks. U.S. stocks also traded higher on Wall Street.

Banks helped lift the pan-European benchmark, with shares of Intesa Sanpaolo SpA up 3.2% in Milan, BNP Paribas SA up 1.8% in Paris and Banco Santander SA 1.3% higher in Madrid.

Shares of Metro AG picked up 3.8% after the German retailer said it has pushed back plans for an initial public offering of its Russian Cash & Carry business due to the political uncertainty in Russia and Ukraine.

On a more downbeat note, shares of Cairn Energy PLC slid 14% after the India-focused oil and gas explorer said impairment charges pushed it to a net loss for 2013. It also suspended a share-buyback program until a tax claim in India is resolved.

Shares of Scania AB fell 2.1% 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 0.1%.

Resolution Ltd. slumped 5.9% 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.

Putin speech

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 signed a treaty to annex Crimea, brushing off Western sanctions.

The EU and the U.S. on Monday imposed visa bans and asset freezes on Russian and Crimean officials after a referendum over the weekend showed an overwhelming majority of Crimea's population voted in favor of rejoining Russia. The referendum was deemed illegal by the Ukrainian government in Kiev, the U.S. and the EU.

Ahead of the referendum, European stock markets sold off sharply, but with tensions appearing to ease on Tuesday markets should turn back to more familiar matters, such as earnings surprises, said David White, trader at Spreadex, in a note. He explained that the Ukraine jitters were largely an excuse for traders to book some profits after a period of solid returns for risk assets.

"What we should see now is business as usual. The market will, while keeping an eye on further developments, turn to the Fed for their guidance on rates and asset purchases," he said.

The U.S. Federal Open Market Committee concludes a two-day meeting on Wednesday, with Chairwoman Janet Yellen holding her first news conference as Fed chief.

Indexes end broadly higher

In Tuesday's trade, Russia's MICEX Index rallied 3.9% to 1,335.34.

Elsewhere in Europe, Germany's DAX 30 index picked up 0.7% to 9,242.55, while France's CAC 40 index jumped 1% to 4,313.26. The U.K.'s FTSE 100 index added 0.6% to 6,605.28.

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:

Fed set to roll out new low-rate pledge

If Crimea rejoins Russia, it's only the latest twist in 1,000 years of European border shifts

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