European stock markets traded higher on Tuesday, led by technology stocks that benefited from Anthropic's forecast, while investors continued to digest the sharp rise in global bond yields and soaring crude oil prices.

The pan-European STOXX 600 index rose 0.5% during the session. Germany's DAX index climbed 0.4%, while France's CAC 40 and the UK's FTSE 100 both gained 0.2%.

Shares in European semiconductor companies rose following reports that artificial intelligence firm Anthropic's initial public offering prospectus included a sharp increase in spending on cloud computing and infrastructure.

Shares of X-Fab rose 6.5% in Paris, while ams OSRAM gained 5.9%. Technoprobe climbed 6.3% in Milan.

In Germany, shares of Infineon Technologies rose 3.1%, Aixtron gained 4%, and Siltronic climbed 4.6%. In Amsterdam, shares of ASML Holding increased 3.2%, ASM International gained 3.8%, and BE Semiconductor Industries rose 3%.

STM Increasing Electronics gained 2.6%, while Soitec rose 3.9%. In Vienna, AT&S gained 4.8%, while Brussels-listed Melexis climbed 3.9%.

September losses end a six-month winning streak

Stocks experienced sharp fluctuations throughout the month, coming under intense pressure as sovereign bond yields rose to their highest levels since the 2008 global financial crisis.

A combination of the European Central Bank's renewed interest rate hikes, continued hawkish statements from monetary policymakers, and sudden warnings of slowing development from AI pioneers added further fuel to the widespread sell-off.

The STOXX 600 index fell by nearly 2% during the month, on a trajectory that puts it on the verge of its first monthly decline in six months.

Javier de Berenger, a fund selector at MAPFRE Asset Management, said: Investing in artificial intelligence is becoming less about promising narratives and more about companies' ability to deliver on them.

Sovereign bond yields are a key anchor for global financial markets, serving as a benchmark for pricing riskier stocks and setting the minimum borrowing costs for corporate debt and mortgages.

As sovereign bond yields rise, the discount rate applied to future corporate earnings expands, putting pressure on equity valuation multiples across continental trading tables.

Diplomatic fatigue and geopolitical stalemate

Adding to the market's exhaustion was the fact that a glimmer of hope for a diplomatic breakthrough in the Middle East quickly flared and died earlier in the month, leaving institutional trading tables in a state of extreme fatigue.

The market has effectively settled into a frustrating stalemate following the sharp exchange of hostile rhetoric between US President Donald Trump and the Iranian leadership over the Strait of Hormuz. With diplomacy stalled and military tensions persisting, energy markets remain trapped in a high-risk environment that is hindering a broader recovery in interest-rate-sensitive equity sectors.

Beringer added that stocks were subject to some restraint due to geopolitical risks.

Increasing exposure to long-term debt may be a logical strategy.

Consumer confidence and European Central Bank speeches are in the spotlight.

On the economic agenda, market participants are awaiting the Eurozone consumer confidence data due later in the session, looking for clues about household sentiment amid rising energy costs and high borrowing rates.

Attention will also be focused on the anticipated remarks of European Central Bank President Christine Lagarde, as traders will be watching her comments for any indications as to whether continued volatility in energy markets may force the central bank to maintain its restrictive monetary policy for a longer period, perhaps even into the final quarter.

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In other stock movements, Eiffage shares fell 3.4%, while Vinci shares dropped 2.8% following the French government's proposal of a significant tax increase on highway and major airport concessions.

Lindt & Sprüngli fell 7% after the Swiss chocolate company lowered its forecast for full-year organic sales growth.