European shares advanced on Wednesday led by corporate earnings, although gains were limited by weak oil and metal prices, while investors awaited Federal Reserve Chair Jerome Powell's second day of testimony for more clues on interest rates.

The pan-European STOXX 600 rose 0.2% by 0815 GMT, led by a more than 1% rise in real estate shares.

Limiting the gains, basic resources was down 0.5% as crude oil and base metals prices declined.

French stocks were up 0.2% after falling in the previous session, as investors assessed the political situation following Sunday's legislative election.

Powell on Tuesday said inflation "remains above" the Fed's 2% target, but has been improving in recent months and "more good data would strengthen" the case for interest rate cuts.

His second day of monetary policy testimony before the House Financial Services Committee is scheduled for 1000 GMT.

Markets are also awaiting June inflation data out of the U.S. and Germany due on Thursday.

On quarterly earnings forecast, Deutsche Bank analysts in a note said, "we expect both earnings and sales to have increased slightly in Q2, marking the first positive y-o-y growth rate since Q1 2023."

Norwegian aerospace and defence company Kongsberg Gruppen climbed 8.1% to the top of the benchmark index after reporting strong revenue growth, improved margins and growing order backlog in the second quarter.

Enagas rose 3.6% after the Spanish grid operator agreed to sell its 30.2% stake in Tallgrass Energy to U.S. fund Blackstone for $1.1 billion.

On the other hand, UK's Barratt Developments slid 2.4% as the homebuilder forecast a fall of up to 7% in its home-building targets for fiscal year 2025, citing high mortgage rates and broader economic concerns.

"Higher interest rates have caused the UK housing market to stall over the last couple of years, and although mortgage demand looks to be gradually picking up, the ambitious targets set by the new government could be exactly what is required to get the market moving," said Mark Crouch, analyst at investment platform eToro.

Travis Perkins jumped 4.4% after British construction materials firm named Pete Redfern as its new CEO, succeeding Nick Roberts who will step down on Sept. 16 after five years at the helm.

Volkswagen shares slipped 2.2% after it warned of closing the Brussels site of its luxury brand Audi due to a sharp drop in demand for high-end electric cars that has hit Europe's top carmaker.

(Reporting by Shubham Batra in Bengaluru; Editing by Janane Venkatraman and Varun H K )