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Europe shares close higher on Yellen reassurance

European stocks closed higher on Tuesday after the first public remarks by new U.S. Federal Reserve Chair Janet Yellen, who stressed continuity in monetary policy and said the recovery in the labor market was far from finished.

The pan-European FTSEurofirst 300 Index provisionally closed higher by 1.2 percent, at 1,316.22 points, for a fifth day of gains.

The basic resources sector showed some of the biggest gains in trade. Several analysts are turning increasingly bullish on the sector and Glencore-Xstrata announced its total copper production in 2013 had risen 26 percent, with shares finishing the day higher by around 2 percent.

Auto stocks also saw a bout of buying action as BMW shares closed higher by around 3 percent after it posted a new sales record for January.

Meanwhile, shares of Barclays dipped as its results fell short of expectations. The U.K. bank is also preparing to cut up to 12,000 jobs.

(Read more: Investors lose patience with Barclays as profits fall short)

Symbol
Name
Price
 
Change
%Change
Volume
FTSE
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DAX
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CAC 40
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IBEX 35
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The main focus on Tuesday was Capitol Hill in the U.S., where Yellen, a little more than a week after taking over from Ben Bernanke, testified on monetary policy and the nation's economic outlook.

Yellen's testimony before Congress came on the heels of two weak monthly jobs reports and a spate of market volatility largely tied to turmoil in emerging markets. Yellen promised a steady and consistent course forward, with less money-printing but continued low rates.

"I have always been in favor of predictable monetary policy that responds in a systematic way to shifts in economic variables," she said. Yellen called herself a "sensible central banker" but called the economic circumstances since the financial crisis "very unusual times."

"We are attempting through our forward guidance to be a systematic and predictable as we can possibly be," she said.

(Read More: Yellen defends Fed,says these are 'unusual times')

U.S. stocks rose on Tuesday, extending gains into a fourth session, on Yellen's comments.

"Bottom line, 'continuity' is what she said in her statement and that seems to be exactly what we got as her testimony was very similar to the last FOMC statement," Peter Boockvar, chief market analyst at the Lindsey Group, said.

(Read more: Yellen sees better economy, less money-printing)

On the data front, U.K. retail sales on a same-store basis rose by 3.9 percent on year, according to the British Retail Consortium. This is up from 0.4 percent in December and is better than economists' forecasts of 0.8 percent growth.

L'Oreal to buy shares from Nestle

French luxury goods maker L'Oreal announced Tuesday that it was buying 8 percent of its own shares from Swiss group Nestle, increasing the Bettencourt Meyers family's stake in the firm to 33.31 percent from 30.6 percent.

L'Oreal shares closed down 3.3 percent.

(Read More: L'Oreal to buy 8% of its shares from Nestle)

French tire maker Michelin reported a 24 percent fall in 2013 net profit, as volatility in foreign exchange markets hit its earnings. However, shares climbed to finish the day up by 3.3 percent.

(Read More: French tire maker Michelin sees 24 percent drop in profit)

Shares of German retailer Metro closed down 2.3 percent after just missing analyst expectations with its first-quarter results on Tuesday.

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