By Sruthi Shankar and Ambar Warrick

(Reuters) – Europe’s benchmark stock index edged higher on Tuesday as stability in the bond market gave stocks some breathing room, with major commodity-linked stocks reversing losses on a turnabout in oil and metal prices.

The pan-regional STOXX 600 index rose 0.2% after marking its best day in nearly four months on Monday, with mining stocks among the top gainers as copper prices steadied near 10-year highs. [MET/L]

Oil stocks also pared a bulk of the day’s losses after oil prices steadied ahead of an OPEC+ meeting, where producers are expected to ease supply curbs to feed growing demand on a gradual economic recovery. [O/R]

European shares pulled back from one-year highs in February due to a spike in bond yields, as investors feared a potential rise in inflation due to global stimulus measures could prompt central banks to tighten monetary policy.

However, several European Central Bank officials have said this week the bank will prevent a premature increase in borrowing costs, including using the flexibility embedded in its bond purchase programme.

“When we look at Western markets, we are not anticipating rate moves, which is why I’m comfortable with the rise in yields,” said Lewis Grant, a senior portfolio manager at Federated Hermes in London.

“We need to acknowledge that yields move because of optimism over re-opening, and that is a good thing for equities.”

Euro zone inflation was also steady in February, taking a break in what is likely to be a temporary but sharp spike in consumer prices in the coming months as more economies reopen.

“Temporary factors are pushing up the rate right now… we expect the elevated levels of inflation in 2021 to be largely transitory and that weaker inflation is set to return in 2022,” analysts at ING said.

Among individual movers, Swiss chocolate maker Lindt & Spruengli jumped 3.3% after saying that it aimed for 6% to 8% organic sales growth this year thanks to pent-up demand after the pandemic hit its business.

German remote connectivity software company TeamViewer rose 4.2% after it said it had acquired Upskill, a U.S. company that specialises in augmented reality applications for front-line workers.

French yoghurt maker Danone slipped nearly 2% as investors questioned whether a recent splitting of its chairman and chief executive roles would give a new CEO room to act.

HelloFresh bottomed out the STOXX 600 as the German meal kit delivery firm said it expects most of its markets to normalise in 2021, after a boom in the prior year.

(Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D’Silva and Lisa Shumaker)