The pound sterling's sudden drop came ahead of BoE governor Mark Carney's speech in which he faced questions over whether another rate cut would be necessary. The U.S. dollar moved higher, however, supported by a 0.7 percent rise in August's house prices. At the close, the sterling/dollar was trading 0.57 percent in the red.
Basic resources stocks were outperforming other sectors and extended gains in Europe's afternoon trade by 3.22 percent. Insurance, oil and gas, chemicals and telecoms stocks were able to join basic resources in the green at the close.
The telecoms sector closed 1.53 percent in the green. Orange, the French telecom company reported Tuesday morning an increase in earnings before interest, taxes, depreciation and amortization (EBITDA) of 1.6 percent in the third quarter to $3.91 billion. It saw an increase of 845 000 new mobile contracts in the same period.
The Norwegian aluminum Norsk Hydro beat expectations when reporting a smaller drop in its underlying profits to about $179 million. Higher aluminum prices have offset lower metal sales as well as effects of negative currency.
Apple is presenting its earnings later on Tuesday.