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European markets pared gains on Tuesday as the oil price fell from its session highs after energy ministers from four oil-producing countries, including Qatar, Saudi Arabia and Russia, said it would freeze output at January levels.

The pan-European was up 0.4 percent in earlier trade but was hovering around the flatline shortly after.

Oil prices had rallied earlier with internationally traded Brent crude surging over 6 percent as the world's biggest oil producers including Saudi Arabia and several key OPEC members met in Doha.

The oil price initially spiked on hopes there could be production cuts. But after the meeting, the nations agreed to freeze oil output at January levels, which saw oil pare gains. It was trading 2.5 percent higher by mid-morning.

The oil market is struggling with oversupply which has pushed the price lower. A production cut would have helped push the price higher but markets were disappointed by the results of the Doha meeting.

ECB easing hopes

European markets rallied at the open earlier after European Central Bank (ECB) President Mario Draghi hinted at further monetary policy easing. Draghi said on Monday that the ECB is "ready to do its part" to make "the euro area more resilient", hinting at further stimulus measures to come.

Markets were also helped by comments out of China. Investors shrugged off poor Chinese trade data that saw exports and imports plunge, after People's Bank of China (PBOC) governor Zhou Xiaochuan dismissed the ideas of capital controls and said he saw no basis for a continuing depreciation of the yuan.

But not all analysts are convinced that central banks have much more room for maneuver, especially since many of the underlying factors behind the recent volatility in stocks remain the same.

"The factors that have driven the sharp declines in the last few weeks haven't changed, and for all of Mr Draghi's soothing comments, markets are becoming much more skeptical of the ability of central banks to do anything other than extend and pretend, or think creatively, with their current policy merely being the equivalent of monetary policy double or quits," Michael Hewson, chief market analyst at CMC Markets, wrote in a note on Tuesday.

Orange-Bouygues takeover talks continue

On the earnings front, French power utility EDF saw net income plunge 68 percent in 2015 after it took a 3.64 billion euro one-off impairment charge. The company also cut its dividend from 1.25 euros to 1.10 euros, but shares were in the green.

Meanwhile, telecoms company Orange saw 2015 revenues fall 0.1 percent and said that discussions over the purchase of rival Bouygues' telecoms unit would take "at least several weeks before any decision is taken". Shares in both companies were trading in positive territory.

Anglo American down 5 percent

The miners are in focus for investors after Anglo American posted a $5.62 billion net loss for 2015 as falling commodity prices weighed on the firm. Anglo American also suspended its dividend and said it would resume "with payout ratio when appropriate". The miner also said that it would reduce capex by 25 percent in 2016 and it is expected to be less than $3 billion.

Anglo American's results came after its debt was downgraded to "junk" by Moody's, which cited a slump in the commodities market. Shares initially rallied over 6 percent but reversed course to trade over 6 percent lower.

The basic resources sector as a whole was volatile with names including Glencore and BHP Billiton seesawing.

Car sales accelerate

Stocks in the auto sector were in focus and initially buoyed by two key pieces of news. Firstly, tiremaker Michelin said net profits rose 13 percent in 2015 and said it expects demand for passenger car, light truck and truck tyres to continue to rise this year, sending shares higher.

Secondly, European car sales rose 6.3 percent in January, according to the European Automobile Manufacturers Association. But registrations of Volkswagen brand cars slumped 4 percent in the wake of the diesel emissions scandal, though the VW Group as a whole saw a 1 percent rise in sales. Shares in Volkswagen pared gains to trade flat.

Meanwhile, Ford saw new car registrations up 11.4 percent, while Daimler and BMW also posted strong sales. Both were hovering around the flatline.

Investors will be keeping a close eye on two key pieces of data out of Europe – the German ZEW economic sentiment index and UK inflation.