Is it possible for Pakistan to recover looted funds held in European banks?

Yes, it is, but it is a complex process. The government of Pakistan would have to file a case and then be prepared to show, i.e. the burden of proof would lie on the government to show beyond a reasonable doubt that the money was stolen from the national exchequer and deposited abroad.

If the money is siphoned locally and then funneled through a series of companies and people locally before being deposited abroad, then all the layered elements would need to be part and parcel of the legal case.

A court case like this can take years if not decades to come to a decision and is very expensive to maintain. There are good chances a change of government would cancel such cases.