London's Financial Times-Stock Exchange 100 index was up 19.4 points, or 0.36%, to 5,363.7 as U.K. June trade gap was less than expected £4.28 billion, down from May's £4.98 billion slide. U.K. retailers had their poorest July in a decade due to the July 7 terrorist attacks in London and faltering housing market tempered consumers' spending.
Among stocks on the move, Bradford & Bingley was lower after company said lending pace has slowed. Filtronic was higher after agreeing to sell its mobile handset antenna business to Technitrol to cut debt.
Germany's DAX index rose 71.62 points, or 1.48%, to 4,909.48 as European Central Bank Economist Issing said there are positive signs of Eurozone economic recovery. But the market was restrained by a report exports fell 0.4% in June after increasing 3.6% in May.
Hochtief was higher on takeover speculation. Deutsche Boerse, which reported higher second-quarter earnings, rose after Deutsche Bank raised its rating to buy from hold.
In Paris, the CAC 40 index climbed 50.68 points, or 1.14%, to 4,491.69. France's budget deficit widened to €35.7 billion at the end of June vs. €32.0 billion a year earlier.
Asian markets finished mixed on Tuesday.
Japan's Nikkei 225 index rallied 121.34 points, or 1.03%, to 11,900.32 amid strong June machinery orders and expectations of a positive assessment of the economy from the Bank of Japan. After the close of trading, the Bank of Japan revised upward its assessment of the economy for the second consecutive month, citing increases in exports and wages. This offset political concerns after Prime Minister Junichiro Koizumi dissolved the House of Representatives yesterday and called for an election as his plan to privatize Japan Post was rejected.
In Hong Kong, the Hang Seng index fell 61.1 points, or 0.4%, to 15,047.84. Property counters led the Hang Seng index lower on concerns of further increases in interest rates, as the market awaited the U.S. Federal Reserve's policy statement today.