European banks rally over 3
Investors price in 25 bps rate hike by Fed
Thyssenkrupp climbs on report of interest in steel division

March 21 Reuters European shares rose over 1 on Tuesday, with banking stocks leading the recovery following a raft of measures to stabilise the sector, while investors hoped for lessaggressive moves by the U.S. Federal Reserve at its policy meeting this week.

The panEuropean STOXX 600 climbed 1.4, extending gains after the index sharply recouped intraday losses and closed the session up nearly 1 on Monday.

The Fed39;s monetary policy meeting ends on Wednesday, with U.S. interest rate futures pricing suggesting that the central bank is likely to hike interest rates by a smaller 25 basis point in the aftermath of the recent banking crisis.

Europe39;s banking index jumped 3.1, with shares in Swiss banks Credit Suisse slipping 0.6 and UBS gaining 3.6.

Banking stocks globally breathed a sigh of relief on Monday after UBS39;s statebacked takeover of the 167yearold Credit Suisse and coordinated actions by central banks to boost liquidity raised hopes that a wider banking crisis was averted in the nearterm.

With no new troubles in the banking sector for the past 24 hours, markets are hoping that39;s a sign the crisis could have peaked, said Russ Mould, investment director at AJ Bell.

The Federal Reserve39;s next interest rate decision tomorrow still has the potential to kick up a fuss if the market thinks it is being too aggressive with…