European shares rose for the first time in three days on Tuesday after a heavy sell-off following Britain's shock vote to leave the European Union, on hopes of a more co-ordinated central bank response to financial market losses, and on firmer oil prices.

The pan-European STOXX 600 index, which had slumped 11 percent in the last two sessions, rose 2.4 percent while the pan-European FTSEurofirst 300 index advanced 2 percent.

British and European banking stocks, which had suffered the worst of the market rout, climbed with Barclays up 6.3 percent while Deutsche Bank rose 3.5 percent.

Among standout gainers, Volkswagen shares rose 4.3 percent, as sources said it was nearing a settlement valued at more than $15 billion with nearly 500,000 U.S. diesel owners and government regulators over polluting vehicles.

Shares in oil majors also advanced to add a further stabilising effect to the market, with oil prices climbing as a looming strike in Norway threatened to cut output in western Europe's biggest producer.

Clairinvest fund manager Ion-Marc Valahu said one factor helping to calm investors were signs there was no rush among British and European politicians to trigger the "Article 50" process that starts mechanisms for a state to leave the EU.

"Given the magnitude of the sell-off we had in the last two days, it was natural that we would rebound, and the fact that there is no rush to trigger Article 50 means is helping to calm things down a bit," Valahu said.

Others remained wary of buying into the rally, pointing to persistent pressure on the British market, such as a downgrade on the United Kingdom's credit rating from Standard & Poor's.

"This looks like a classic dead cat bounce," ETX Capital's head of trading, Joe Rundle, said.