The Paris Bourse is set to continue its recovery in early trading on Tuesday, after consolidating at the beginning of the month, benefiting from signs that tensions in the banking sector may be easing.

At around 8:15 a.m., the 'future' contract on the CAC 40 index - expiring in April - climbed 54.5 points to 7,147 points, pointing to an opening in positive territory.

The Paris market has had a turbulent start to the month, falling back below the symbolic 7,000-point mark for a time and erasing much of the gains made since the start of the year.

But the mood now seems to be easing, and European equities, which were largely neglected last year, remain among the best performers this year.

'Against a backdrop of improving prospects, investors have spotted an opportunity in Europe, given the easing of the energy crisis, relatively attractive valuations in the region and the reopening of China', explains Antoine Lesné, Head of Research and Strategy at SPDR.

In Europe, the near-universal rebound is primarily benefiting banking stocks, whose STOXX index gained 1.4% yesterday, bringing its annual decline down to around 1%.

'No news, good news' remains something of a leitmotif for the European banking sector, but risk appetite is also being supported by positive developments on the other side of the Atlantic," point out analysts at Danske Bank.

Investor sentiment is benefiting from US bank First Citizens' purchase of all deposits and loans from Silicon Valley Bank (SVB), which went bankrupt earlier this month.

The recovery is also being helped by a weaker dollar, rising oil prices and solid economic indicators, such as yesterday's Ifo business climate index in Germany.

However, the rise in European equities is being held back by a new episode of tension in the bond compartment, against a backdrop of renewed appetite for riskier assets.

On the other side of the Atlantic, the sell-off is being confirmed, with 10-year Treasuries yields rising once again to reach almost 3.53% yesterday.

Expectations of a 25 basis point rate hike by the US Federal Reserve in early May have risen in the space of a weekend from 17% to 45%.

The dollar continues to fall against the euro, back to around 1.0820 against the greenback in the wake of yesterday's robust Ifo index.

On the oil market, prices are stabilizing, with a barrel of US light crude advancing by 0.1% to $72.8

While investors seem willing to take on more risk now that banking fears have dissipated, they remain cautious on a number of issues.

In a note published yesterday, the DWS teams question the 'unhealthy relationship' linking European banks to US real estate.

'The fresh turmoil that hit European bank stocks on Friday, due to concerns about their exposure to US commercial real estate, shows that investors are still not comfortable with European banks, even after the Credit Suisse takeover',

Inflation also remains a major concern.

While awaiting further data on this front in both the eurozone and the US before the end of the week, investors will be keeping a close eye on this afternoon's publication of the Conference Board's US consumer confidence index.

While the recent turmoil on the financial markets could weigh on household morale, the ConfBoard survey focuses above all on employment conditions, which to date remain solid.

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