European stocks closed higher Wednesday, amid renewed optimism the world's two largest economies might be able to resolve their long-running trade dispute.

The pan-European Stoxx-600 closed provisionally up around 0.6 percent, with most sectors and major bourses in positive territory.

Europe's basic resources stocks — with their heavy exposure to China — were the top performers, up almost 2 percent as investors grew increasingly hopeful of a resolution to the U.S.-Sino trade spat.

Travel and leisure was another top-gaining sector, amid earnings news. Sweden's Kindred Group reported an all-time high in active customers in the fourth quarter of 2018. Shares of the Stockholm-listed stock rose by 7.5 percent.

Looking at individual stocks, German lighting firm Osram Licht shot up to the top of the Stoxx 600 in late afternoon trade after confirming a report that it had held talks with Bain Capital and Carlyle Group over a potential joint takeover. Shares surged more than 14 percent.

Meanwhile, ABN Amro tumbled to the bottom of the index. The Dutch bank reported fourth-quarter earnings results way below expectations on Wednesday, as loan impairments jumped. Shares of the company slipped 7 over percent.

On the data front, British inflation fell to a two-year low in January, slipping below the Bank of England's target in the process. Official data showed U.K. consumer prices rose at an annual rate of 1.8 percent in January, following a 2.1 percent increase at the end of last year.

Elsewhere, euro zone industrial production was weaker-than-expected in December. Official estimates published Wednesday showed a drop in the output of capital goods contributed to a 0.9 percent fall month-on-month and a 4.2 percent fall year-on-year.