The pan-European FTSEurofirst 300 Index provisionally closed down 0.2 percent at 1,208.41, after previously rallying to a high not seen since the start of June, boosted by the telecoms and basic resources sectors.
Basic resources stocks - with their heavy exposure to China - still closed around 2.12 percent higher, after market hopes were piqued that the Chinese government will attempt to stimulate the country's economy.
In telecoms, over $10 billion is set to change hands, as two key mergers and acquisitions (M&A) deals were announced on Tuesday.
Firstly, French media and telecoms conglomerate Vivendi entered into exclusive talks to sell its majority stake in Maroc Telecom to Dubai-based Etisalat for 4.2 billion euros ($5.54 billion) in cash. Vivendi shares closed around 2.24 percent higher on Tuesday.
(Read More: Telecoms tie-ups: Over $10 billion to change hands)
Meanwhile, Spanish telecoms firm Telefonica and KPN announced they are to combine their German mobile businesses. That would help them compete with bigger rivals Deutsche Telekom and Vodafone.
U.S. stocks erased their early gains Tuesday, as a weaker-than-expected Richmond manufacturing activity report outweighed earlier enthusiasm. The Dow Jones Industrial Average struggled to hold its gains, while the S&P 500 and the Nasdaq toggled in and out of negative territory.
While Europe struggled in Tuesday trading, Spain and Portugal bucked the trend.
The Spanish Ibex closed up 1.4 percent after the Bank of Spain released a report that estimated the economy shrank by only 0.1 percent in the second quarter — its smallest decline since it slid back into recession at the end of 2011.
Portuguese President Anibal Cavaco Silva calmed investors' fears by ruling out a snap election and vowing to maintain the center-right coalition government in place until 2015. This calmed some nerves about Portugal's ability to work its way out of European Union/International Monetary Fund bailout in mid-2014. The Portuguese benchmark stock index closed flat.
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