European stocks closed higher on Tuesday, starting the new quarter in positive territory, after a slew of economic data was released for the euro zone and U.S.
Stimulus on the cards?
The pan-European FTSEurofirst 300 Index provisionally closed higher by 0.5 percent at 1,399.74 points on Tuesday, with a broad-based rally after closing the previous quarter with slim gains of just 1.2 percent
A fresh bout of economic data was released Tuesday which gave both the European Central Bank (ECB) and investors plenty to think about. Unemployment in the euro area remained stuck at 11.9 percent in February, hardly moving from this time last year, when the figure was 12 percent, according to Europe's statistics office Eurostat.
Meanwhile, the euro zone manufacturing purchasing managers' index, compiled by data company Markit, hit 53.0 in March, down from 53.2 the previous month - but remained above the crucial 50 mark that signals growth. The figure is also below the January high of 54.
"Despite having cooled slightly in March, the euro area manufacturing sector continues to enjoy its best spell of growth since early-2011. The rate of output growth remains encouragingly robust," Chris Williamson, chief economist at Markit, said in an accompanying press release.
France's CAC 40 hit its highest level since September 2008 during afternoon trade, closing up 0.7 percent, after data showed the country's manufacturing sector was recovering after a long decline.
Benchmark indexes in Greece, Portugal and Italy - which surged at least 14 percent in the first quarter - also performed strongly over the day.
The figures come at a time when market watchers continue to weigh up the possibility of the European Central Bank (ECB) announcing further stimulus on Thursday when its governing council meets in Frankfurt.
Some analysts believe that the central bank will act to combat weakening growth in consumer prices across the 18-country bloc. Monday's flash reading of inflation, which came in below expectations at 0.5 percent, did little to quash that speculation.
(Read more: Euro zone inflation slides, fueling deflation fears)
Stocks in the U.S. also saw strong gains across the board, although they eased off their best levels after the S&P 500 briefly shot to a fresh intraday record, as investors digested the latest batch of economic reports.
The Institute for Supply Management's manufacturing reading for March hit 53.7, versus an expectation of 54. A reading above 50 indicates expansion.
Elsewhere, U.S. factory activity growth slowed slightly in March after nearing a four-year high in February, according to Markit, with the final U.S. Manufacturing Purchasing Managers Index slipping from 57.1 in February to 55.5.
Back in the U.K., a separate reading showed March manufacturing PMI at 55.3 versus a downwardly revised 56.2 in February.
The U.K. FTSE 100 provisionally closed higher by 0.7 percent, having closed lower on Monday by 0.3 percent, ending the first quarter of 2014 down by 2.24 percent.
The U.K. index has faced a difficult 2014 so far due to its exposure to China, which has faced increasing slowdown fears. However, expectations of more stimulus from the Chinese to prop up the economy boosted mining shares such as BHP Billiton, which closed higher by around 2 percent.
Meanwhile, unemployment in Germany fell for the fourth straight month in March. The figure fell by 12,000 with 2.901 million of the population now out of work, compared to 2.914 million in February.
In Asia, shares were mixed in subdued trade as investors digested the two key gauges of Chinese manufacturing activity. The government's official purchasing managers' index (PMI) rose to 50.3 in March from 50.2 in February, in line with analyst expectations. However, the final HSBC PMI reading for the month came in at an eight-month low of 48, compared with the flash estimate of 48.1 out last week.
(Read more: China's twin PMI data show a mixed picture)
Weir Group falls
In stocks news, shares of Metso soared over 19 percent to the top of the Euro Stoxx 600 Index with reports that U.K.-based engineering company Weir Group is poised to take over the Finnish firm. Shares of Weir Group, meanwhile, closed lower by 0.7 percent.
French engineering conglomerate Alstom saw its shares close the day just over 8 percent higher after a deal to sell its a heat exchange unit to German private equity group Triton.
Meanwhile, transport operator FirstGroup was cut to a "neutral" rating from "buy" by Bank of America Merrill Lynch on Tuesday; shares drifted down by roughly 4.7 percent.