European shares closed higher on Tuesday after a raft of positive earnings news as well as a successful bond auction in Italy.
Major European Indexes
The FTSEurofirst 300 Index closed provisionally up 0.8 percent at 1,102.26 points.
At an auction on Tuesday Italy sold 7 billion euros of five and 10-year government bonds. The treasury paid its lowest borrowing costs since May 2011, with a gross yield on the benchmark 10-year bonds of 4.92 percent. This comes despite former Prime Minister Silvio Berlusconi's threat to bring down the government on Saturday.
Dr Nicholas Spiro, managing director at Spiro Sovereign Strategy believes markets took this heightened political risk in their stride.
"For the time being, Mr Berlusconi's tirades against the Monti government are seen as little more than background noise. Today's auction of longer-dated paper was an important test of the new-found resilience of Italy's bond market, " he said in research note.
"The Treasury will be pleased that it hit the top end of its target range and that borrowing costs fell further, with a pre-crisis sub-5 percent yield on the 10-year note. This was a well-received sale at a sensitive time for Italy."
In the U.S., superstorm Sandy was downgraded to a tropical cyclone on Tuesday morning, but it was still one of the biggest storms to ever hit the U.S.. The storm left 5.5 million people without power after sustained winds of up to 80 mph (129kph) and mass flooding along the East Coast. Thirteen deaths have been reported in the U.S. and Canada as a result of the storm. Equity and bond markets in the U.S. will be shut on Tuesday.
Early estimates suggest that the cost to the U.S. economy could be as much as $20 billion.
European reinsurance firms, such as Munich Re and Swiss Re closed higher after falling on Monday due to the storm. Analysts at Citi said Tuesday that the losses were unlikely to have any impact on pricing for next year.
In Europe, Spain's so-called "bad bank" is set to begin buying up millions of euros of distressed assets at big discounts of between 32.4 percent and 79.5 percent of original book value, the Bank of Spain said on Monday. The scheme will first receive assets from state-owned banks worth 45 billion euros ($58 billion) and will have a maximum volume of 90 billion euros.
Also in Spain, third-quarter gross domestic product (GDP) data was released showing a 0.3 percent contraction from the previous quarter but the figure beat estimates.