European markets closed marginally higher on Tuesday as tensions between the U.S. and North Korea showed signs of subsiding, prompting investors to return to riskier assets.
The pan-European was up 0.09 percent with the majority of sectors moving in positive territory.
Oil and gas were lower with oil prices moving south as fears over a weaker demand in China and strong OPEC production weighed on investor sentiment. Retailers were also dragged lower as Next slumped 2.8 percent. Berenberg downgraded its rating from hold to sell saying a recent 10 percent rally in the share price provided "material downside" risk.
Fiat Chrysler held onto gains seen Monday following reports that it has received at least one bid from a Chinese automaker and continued at the top of the European benchmark, up by more than 8 percent.
Shares of food retailer Sainsbury were slightly higher after pressing pause on a proposed £130 million ($168 million) takeover of grocery wholesaler Nisa amid competition concerns.
German chemical company K+S was among the worst performer, down by 5 percent, after reporting weaker-than-expected results and withdrawing its 2020 EBITDA (earnings before interest, tax, depreciation and amortization) outlook.
German airliner Lufthansa rose 4.7 percent, it's best day in 5 months and led the gains in the German market after reports that it is in talks aimed at rescuing Air Berlin. The latter has filed for insolvency on Tuesday. Shares in Air Berlin plunged more than 50 percent on the news. According to Reuters, Easyjet is also part of the talks to buy assets from Air Berlin. Shares in Easyjet hit jumped more than 4 percent and hit session high on the news.
In the meantime, U.S. stocks were higher driven by stronger-than-expected U.S. retail sales and a slowdown in tensions between North Korea and the U.S.
The ongoing war of words between President Kim Jong Un and President Donald Trump appeared to cool on Tuesday after the North Korean leader signaled that he would delay plans to fire a missile near Guam until it heard more from the U.S. administration.
Nevertheless, other troubles continued to plague the White House as several key business figures departed Trump's manufacturing council following his failure to initially condemn the violence of white supremacists in Charlottesville over the weekend. Three CEOs - Merck's Kenneth Frazier, Intel's Brian Krzanich and Under Armour's Kevin Plank - have all stepped down.
In British politics, the government outlined plans for an interim customs agreement with the EU after Brexit to allow the freest movement of goods.
Markets in Austria, Italy, Greece and Poland are all closed Tuesday in celebration of Assumption Day.