European shares rose on Tuesday as investors bought up beaten-down stocks following sharp falls Monday after a plan outlined at last week's EU summit for stricter budget rules failed to ease worries about the region's debt crisis.

Gains, however, are likely to be short-lived on concern about credit downgrades after Moody's Investors Service said its ratings for all EU member states would be reviewed in the first quarter of 2012 as well as eight Spanish banks.

Yesterday's move takes us to a level a little bit more realistic and we might just see the market bounce a little bit, Giles Watts, head of equities at City Index, said.

But I would not read to much in it. There is still nervousness in the market, and unless the move up is backed up with something concrete, investors are likely to take profits later in the day.

By 8:09 a.m., the pan-European FTSEurofirst 300 index of top shares was up 0.1 percent at 968.45 points after posting their biggest fall in three weeks Monday.

The STOXX Europe 600 Automobiles & Parts index was the biggest sectoral gainer, up 0.9 percent after falling 3.3 percent in the previous session. (Reporting by Joanne Frearson)