European shares rose on Wednesday, echoing an upbeat mood in Asian markets following Chinese tech giant Alibaba's break-up plans, while Swiss bank UBS climbed after it rehired Sergio Ermotti as its CEO.

The benchmark STOXX 600 index rose 0.6% by 0705 GMT, in line with the gains in Asian equities.

UBS Group AG climbed 2.2% after the Swiss bank announced Ermotti will take the helm to steer its massive takeover of smaller peer Credit Suisse. Credit Suisse climbed 2.1%, while the financial services and banking indexes were up about 1% each.

Germany's Infineon climbed 5.1% after the chipmaker raised its outlook for both its fiscal second quarter and the whole of 2023. The wider tech index climbed 1.7% to lead sectoral gains.

Aroundtown fell 5.3% to a fresh record low after the German real estate company reported a full-year net loss of 457 million euros and said it was suspending dividend payout due to market uncertainties.

Mercedes-Benz slipped 1.8% after news Kuwait's sovereign wealth fund is planning to reduce its stake in the German luxury carmaker via the sale of 20 million shares. (Reporting by Sruthi Shankar in Bengaluru; Editing by Dhanya Ann Thoppil)