European equities scaled fresh two-year highs on Tuesday, boosted by miners, as optimism about economic recovery gained momentum following encouraging U.S. home price data and comments over growth in top metals consumer China.
A report earlier showed U.S. home prices rose in November, adding further to evidence of a housing market recovery there. China's top think tank, meanwhile, lifted its economic growth forecast for 2013 to 8.4 percent from 8.2 percent, with faster expansion seen in the first half of the year.
The pan-European FTSEurofirst 300 provisionally ended up 0.5 percent at 1,178.55, its highest close since Feb. 18, 2011, taking the rally off its June lows to around 24 percent. Mining stocks ended the day up 1.8 percent.
Fund managers said that while there was the possibility that equities would level off after such hefty gains, they deemed a significant near-term sell-off as unlikely.
"You will get to the point where that squeeze higher will have absorbed all of the cash that was destined to go into equities and it's at that point markets will be vulnerable - but I don't think we're there yet," said Andrew Cole, a fund manager at Baring Asset Management, which has 32.4 billion pounds ($50.9 billion) of assets under management.
London's FTSE 100 posted the biggest gains out of the country-specific stock indexes, as a result of the rally in mining stocks, which came after Anglo American said it will take a $4 billion impairment charge on its Minas-Rio project, indicating it expects the much-delayed project to eventually commence. The charge was in line with analysts' expectations.
Market research company GfK released its latest survey results on consumer sentiment in Germany on Tuesday. The index rose to 5.8 points for February against 5.7 points for January, showing Europe's largest economy is set to pick up slightly next month. The German Dax closed unofficially 0.3 percent in the black.
Meanwhile, in a sign of growing stability in Greece, market regulators are shelving a short-selling ban on stocks, except for shares of Greek banks. The ban, which was put in place 7-months ago to protect investors from the debt crisis fallout, expires on January 31. But the ban on short-selling bank stocks will be extended to April 30.
Spain, too, is expected to end its ban on short-selling stocks and bonds, although controls on short-selling bank shares are forecast to remain.
A spat between Bumi shareholders, Nat Rothschild and the Bakrie family, continued on Tuesday after a series of high-profile disagreements at the London-listed miner since their union in 2010. Rothschild attacked both the board and CEO Nick von Schirnding on CNBC Tuesday, leading to the latter rebutting accusations shortly afterwards. Shares were down 3.22 percent.
U.K. bank RBS is close to a settlement over the recent Libor scandal, according to reports in the Wall Street Journal. The firm could also be dragged back into a bankers' bonus debate, according to the Financial Times, as it prepares to pay 250 million pounds ($393 million) to staff at an investment division. Shares were down over 5 percent.