Germany's RWE and E.ON slumped to close around 3.3 percent lower and 6.2 percent down respectively. This was after Spiegel Online reported that the energy companies were short of as much as 30 billion euros ($34 billion) needed to build a disposal site for nuclear waste as part of Germany's exit from nuclear power.
In addition, the auto sector was in focus on Tuesday after data from the Association of European Automobile Manufacturers showed new car registrations rose 11.5 percent year-on-year in August.
The news boosted European auto stocks, with Italy's Fiat Chrysler leading the pack, closing up 2.7 percent. Shares of BMW also performed well, ending around 2.2 percent higher.
Light crude oil prices gained on Tuesday, despite concerns over weak Asian demand. This supported energy stocks, with Seadrill near the top of the STOXX 600, ending more than 7 percent higher. Tullow Oil, also outperformed, closing 4.3 percent higher.