European equities finished higher on hopes that the Greek parliament will be able to pass the legislation needed to get a third bailout.
The pan-European Stoxx 600 closed around 0.4 percent higher paring earlier losses, with most major bourses ending in positive territory.
The German DAX and London's FTSE both closed in the region of 0.2 percent higher, while French stocks outperformed to end 0.6 percent higher.
Greece in focus
European markets
Global stocks staged a relief rally on Monday, but wavered on Tuesday amid concerns that Greece remains some way off receiving its much-needed bailout, despite coming to a broad agreement with creditors. There are also fears that Greek Prime Minister Alexis Tsipras could face a revolt from his own party over the terms of the 86 billion euro ($95.2 billion) bailout deal.
Read MoreWho was the boss in the Greek talks?
Iran deal eyed
U.S. stocks traded mildly higher on Tuesday as investors eyed economic reports and earnings that continued to indicate less-than-robust growth, amid news of a deal in Iran.
Oil prices tanked as much as 2 percent on news that Iran and six major powers have clinched a historic nuclear deal, however Brent crude pared losses to trade around $58 per barrel at market close in London. The agreement could see international sanctions against Iran lifted and its oil exports return to the market.
Some of the major European oil and gas stocks took a hit, including Tullow Oil finished down over 2 percent.
UK homebuilders tank
U.K. homebuilders took a hit on Tuesday after the Bank of England said a rise in interest rates is edging closer.
Speaking at a Treasury committee meeting, Carney said while the pace of rate rises will be gradual, an interest rate rise in the U.K. is "moving closer".
House builders Berkeley and Bellway tumbled around 2.5 and 3.5 percent respectively.
U.K. inflation slipped back to zero in June after a small uptick in May as food and clothing dropped in price. Meanwhile, German Zew Institute's economic sentiment index fell to 29.7 points in June, from 23.5 points the previous month.
In individual stock news, Sky climbed 4 percent to the top of the FTSE after Deutsche Bank raised its outlook on the stock from buy to hold.
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