European stock markets rallied Tuesday following gains in Tokyo and overnight on Wall Street as investors assessed the outlook for interest rate hikes in the face of high inflation.

Asian markets closed higher in limited trade, driven by a rebound in tech firms, while comments from Federal Reserve officials played down concerns that the U.S. central bank will embark on an aggressive phase of monetary tightening.

U.S. equities jumped Monday with plenty of support coming from Apple's blowout earnings report last week, while the current reporting season has proved fruitful despite concerns about inflation and central banks withdrawing financial support.

"Good news is that some Federal Reserve officials are finally out trying to soothe investors' nerves, saying that they still want to avoid unnecessarily disrupting the U.S. economy," said Swissquote analyst Ipek Ozkardeskaya.

"The S&P 500 (on Wall Street) finished January with a strong two-day rally, but the index is still more than five percent lower than where it kicked off the year, having recorded its worst month since March 2020."

Easing concerns over aggressive U.S. rate tightening weighed on the dollar.

Oil prices dipped as the world's top crude-producing countries prepare to meet Wednesday to discuss a further increase in output.

(With input from AFP)