European equities closed higher on Tuesday after paring losses in earlier trade, with investors keeping watch for developments in Greece and a two-day policy meeting at the U.S. Federal Reserve.
The pan-European FTSEurofirst 300 closed up around 0.6 percent, despite slumping as much as 0.9 percent in morning trade.
The U.K.'s benchmark FTSE 100 index closed roughly flat, while the French CAC and German DAX climbed to close around 0.5 percent higher.
Read MoreGreece defiant, accused of 'breaking all the rules'
European markets
Following a meeting with leading members of the Greece government on Monday, ostensibly to discuss the failure of talks with lenders at the weekend, Greek Prime Minister Alexis Tsipras blamed creditors for the deadlock – a claim rebuffed in Europe.
Michael Fuchs, vice chairman of Germany's CDU/CSU - the ruling conservative coalition, led by German Chancellor Angela Merkel -- told CNBC Tuesday that Greece needed to decide whether to stay in or get out of the euro zone.
Greek stocks remained under pressure, slipping to close around 4.8 percent lower.
Elsewhere on Tuesday, investors were watching for signs of a looming interest rate hike from the Fed as a meeting of its monetary policy committee got under way. The central bank is expected to adjust its economic and interest rate forecasts and possibly tweak its statement, while continuing to emphasize that rate hikes are dependent on economic data.
In other news, the U.S. and Europe's relationship with Russia could deteriorate further on the military front. Russian President Vladimir Putin announced that Russia would add more than 40 ballistic missiles to its nuclear arsenal this year.
Read More Russia warns of 'new military confrontation' in Europe
Air France slump
In individual stocks news, Air France KLM slumped to close around 3.4 percent lower, after the airline announced it was pulling out of several routes in an effort to cut costs.
At the other end of benchmark indexes, Gamesa closed around 6.5 percent higher after the Spanish wind turbine manufacturer unveiled its 2015-2017 strategy, with plans to double operating profit during this period.
On the data front, the U.K. rebounded from its dip into deflation last month, as prices rose in May for the first time since October thanks to a rises in transport costs, official data published Tuesday showed.
However, German-based think tank ZEW said its monthly economic sentiment survey fell to a 7-month low, suggesting that the German recovery was suffering from fears of contagion from the Greek crisis.
U.S. stocks traded higher on Tuesday as investors attempted to shake off worries over lack of resolution in Greece debt talks.
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