Europe closes up despite oil fall; retail outperforms

European equities gained on Tuesday, despite continued wariness surrounding low oil prices and China's economic slowdown.

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European and U.S. markets bucked the pessimistic trend that saw Asia's major markets closed mostly lower.

The pan-European STOXX 600 came off session highs to close up by around 0.9 percent.

Germany's DAX closed up around 1.6 percent, the U.K.'s FTSE finished 1.0 percent up and the French CAC 40 ended around 1.5 percent higher.

The Spanish IBEX underperformed to close around 0.3 percent higher, while the Italian FTSE MIB ended up 1.1 percent.

Oil edges towards $30

The oil price kept investors cautious, with crude oil futures falling towards 12-year lows, weighed down by China's economic slowdown, glut concerns and a strong U.S. dollar.

By Europe's stock market close, Brent crude futures for February and U.S. crude futures were trading at around $30.90 and $30.55 respectively.

The continued decline in oil prices pushed many European energy stocks lower. A particularly weak performer was Tullow Oil, which slumped more than 7 percent.

Basic resources companies were also hit by concerns over the health of the Chinese economy, with Glencore, Rio Tinto and BHP Billiton all posting sharp losses.

BP closed down 1.5 percent after the company announced plans to slash 5 percent of its global workforce, on the back of the continued slump in oil prices.

Morrisons, Tesco surges

The retail sector was a bright spot for investors on Tuesday. British supermarket chain Morrisons came off session highs, but finished 8.7 percent up, after it said that like-for-like sales excluding fuel in the 9 weeks to Jan 3 were up 0.2 percent.

Shares in rival supermarket chain Sainsbury were up over 3 percent, after market research firm Kantar said its sales rose over the holidays and its market share has risen to 17 percent in the U.K.

Tesco ended over 6.5 percent higher, despite its market share and sales slipping in the 12 weeks to January 3, according to Kantar.

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Meanwhile, Finnish retailer Kesko announced plans to buy building firm Onninen in an all-share deal worth 369 million euros ($401 million), sending shares to close over 7 percent higher.

And German retailer Metro reported first quarter like-for-like sales were up 0.1 percent and reaffirmed its full-year guidance, sending shares over 3 percent.

Carmakers drive higher

The auto sector was the best-performing sector on Tuesday, up over 2 percent. Peugeot Citroen shares finished up 4.8 percent after it said global vehicle sales volumes rose 1.16 percent in 2015.

Italy's Fiat Chrysler was almost 3 percent higher after chief executive Sergio Marchionne said the carmaker would end the year at the high end of its financial guidance.

And embattled German carmaker Volkswagen said it was expanding its U.S. goodwill program to those affected by the emissions cheating scandal. Shares in Volkswagen were over 3 percent up.