By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets rebounded from sharp losses on Tuesday, as investors waited for fresh U.S. housing and confidence data to gauge if the U.S. economy is recovering from the extreme winter. Soft German business-confidence data didn't ruin the positive trading mood.

The Stoxx Europe 600 index gained 0.7% to 326.74, partly recovering from its biggest one-day percentage drop in more than two weeks, posted on Monday.

Investors in Europe largely ignored weaker-than-expected German business-confidence numbers, with the Ifo business-climate survey falling to 110.7 in March. The Ifo Institute said confidence among businesses in Europe's largest economy was bruised by the tensions in Ukraine's Crimea region and the weakness in emerging-market economies.

Instead the pan-European benchmark was buoyed by shares of Kingfisher PLC , which gained 3.4% after the do-it-yourself retailer reported a 5% rise in fiscal full-year adjusted earnings per share and said it will return 200 million pounds ($330 million) to shareholders in fiscal 2015.

EasyJet PLC climbed 4.8% after the budget carrier raised its first-half guidance, citing benefits from cost cuts and its focus on strategic priorities.

In Amsterdam, PostNL NV rallied 6.9% to 3.29 euros ($4.55) after J.P. Morgan Cazenove lifted the courier to overweight from neutral. The analysts said the recent pullback in the share price appeared overdone, with the new price target of EUR4.20, down from EUR4.55, implying 37% upside potential.

Germany's DAX 30 index climbed 0.8% to 9,260.58, while the U.K.'s FTSE 100 index advanced 1% to 6,586.23. France's CAC 40 index gained 0.8% to 4,310.28.

Later in the day, attention turns to the U.S., where a raft of data will signal whether the housing market is recovering from the harsh conditions this winter. The S&P/Case-Shiller 20-city composite and the FHFA house-price index, will likely show muted moves in January, when then are released at 1 p.m. in London, or 9 a.m. Eastern Time. New-home sales and consumer confidence data are on tap at 2 p.m. in London.

U.S. stock futures pointed to a higher open on Wall Street.

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