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Europe shares close mixed after Brussels terror attacks

European markets finished mixed on Tuesday after explosions rocked the Belgium capital of Brussels.

Terror attacks in Brussels

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The pan-European STOXX 600 provisionally closed lower by 0.21 percent after paring some losses during the afternoon session. It was down as much as 1.6 percent in earlier trade.

A series of deadly explosions rocked Brussels on Tuesday, targeting the Belgian capital's main airport and metro system. Belgian officials said the bombings killed at least 31 people and injured nearly 200, according to reports. Officials raised the terror threat level and shut down public transit after the blasts.

Stocks reacted negatively with a number of names in the travel and leisure sector closing sharply lower. Thomas Cook Group closed down over 4.2 percent, amid an earnings update, while airlines including Ryanair, Easyjet and IAG all finished in the red.

"No surprise to see European airlines and travel shares being offloaded this morning while gold and the yen benefit from fresh safe haven seeking," Mike van Dulken, head of research at Accendo Markets, said in a note on Monday.

Fed comments

As well as the Brussels explosion, investors focused on comments by U.S. Federal Reserve policymakers which have been sending mixed messages about the future interest rate hiking path. Atlanta Federal Reserve President Dennis Lockhart said on Monday that the Fed could hike interest rates in April. But Fed chair Janet Yellen struck a more dovish tone last week.

"Cautious trading appears to be the order of the day after last week's dovish surprise from the U.S. Federal Reserve," Michael Hewson, chief market analyst at CMC Markets, said in a note on Monday.

Meanwhile, Brent futures traded slightly higher at around $41.64 at the close of the European session.

Barclays down 2%

Meanwhile in corporate news, miner Anglo American said it has completed a bond-buying program that has allowed it to reduce its net debt by $130 million, amid a continued commodity price rout. Shares closed up 0.7 percent.

Italy's Banco Popolare shares closed up 0.4 percent despite Reuters reporting that it was considering a 1 billion euro capital increase as part of measures to win the support of the European Central Bank for its planned merger with Banca Popolare di Milano.

Sticking with the banking sector, Barclays shares closed 2 percent lower after Goldman Sachs cut its price target for the stock.

On the data front, Markit's monthly preliminary composite purchasing managers' index (PMI) reading for France came in at 51.1, rising from the 49.3 recorded in February. This is above the 50 point mark which separates contraction from expansion. And the German March flash composite PMI – which tracks the country's manufacturing and services activity – came in at 54.1, the same as in February.

The closely-watched German IFO business climate index for March rose to 106.7, beating a Reuters forecast of 106.0, suggesting business sentiment in the euro zone's largest economy rose this month.

- CNBC's Antonia Matthews contributed to this report.

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