European bank stocks rose to their highest level in one month on Tuesday helped by bets the European Central Bank would bring interest rates out of sub-zero territory in the coming months.

ECB Chief Christine Lagarde said on Tuesday she saw the bank's deposit rate at zero or "slightly above" by the end of September, implying an increase of at least 50 basis points from its current level.

Giuseppe Sersale, fund manager at Anthilia, said gains in banking stocks were in part due to Lagarde's comments but also reflected hopes of a broader market stabilisation.

"The fact that banks are rearing their head could be seen as a sign that we're moving towards a stabilisation of the market and an easing of the feeling of impending recession," he said.

The STOXX Europe Bank index was up 1% by 1105 GMT, while the broader STOXX 600 was down 0.5%.

(Reporting by Danilo Masoni; Editing by Saikat Chatterjee)