European shares recovered slightly on Tuesday to close narrowly lower, as worrying euro zone signals was tempered by better-than-expected U.S. factory orders.
The pan-European FTSEurofirst 300 Index provisionally closed lower by 0.5 percent at 1,157.94 points, with Fresenius weighing heavily on the German DAX. Shares in the medical group plummeted by 8.8 percent after reports of cuts to the U.S.'s Medicare program that could hit its business.
Earlier in the day, European shares were pushed lower by official data that showed euro zone unemployment hit a record high in May at 12.2 percent, with 19 million people now out of work.
After initial wobbles, U.S. stocks added modest gains, with the Dow Jones Industrial Average back above the psychologically-important 15,000 level, following a promising factory orders report. European stocks were also boosted by the report.
Factory orders gained 2.1 percent in May, rising for a second-straight month, according to the Commerce Department. Economists polled by Reuters had expected a gain of 2 percent.
In Asia, stock markets traded mixed on Tuesday, but sentiment across the region was much improved after a series of upbeat global manufacturing reports.
(Read More: Is Japan's Nikkei Getting Its Mojo Back?)
In the U.K., the British Chambers of Commerce (BCC) reported that U.K. business confidence reached its highest level since 2007, bolstered by fast-rising exports.The BCC forecast the U.K. economy grew 0.6 percent in the second quarter.
Meanwhile, tensions remained high in Italy's fragile coalition government on Tuesday. Prime Minister Enrico Letta called a government meeting after the Civic Choice (Scelta Civica) party threatened to withdraw from the coalition on Monday, citing frustration with the slow pace of reforms. Italy's FTSE MIB closed provisionally down 0.7 percent.
Problems in other indebted euro zone nations also troubled investors. An interview by Greece's economy minister with a German newspaper led to speculation the Greeks could receive another debt haircut, while the Portuguese government reaffirmed its commitment to austerity following the overnight resignation of its finance minister.
Tensions in North Africa could further unsettle investors, as Egyptian President Mohamed Mursi rebuffed an army ultimatum to solve Egypt's political crisis. However, Egyptian shares closed provisionally higher by 4.9 percent, amid optimism an eventual intervention by the army will resolve the crisis.