The pan-regional STOXX 600 rose 0.5% by 0810 GMT, supported by rate-sensitive technology stocks. The energy sector added 0.8%.
The STOXX 600 ended 2022 with sharp losses, driven by central banks' aggressive policy tightening to rein in soaring prices, economic slowdown, the Russia-Ukraine war that increased inflationary pressures and growing concerns over COVID cases in China.
Germany's finance minister expects inflation in Europe's biggest economy to drop to 7% this year and to continue falling in 2024 and beyond, but expects high energy prices to be the new normal.
The German benchmark DAX added 0.5%.
London and Dublin stock exchanges will be closed for New Year's day, while other European exchanges started the year on a positive note.
Croatia rang in the new year with two historic changes, as the European Union's youngest member joined both the EU's border-free Schengen zone and the euro common currency.
(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Vinay Dwivedi)
