In Europe, banks posted the biggest sector loss on Tuesday, with several Spanish and Italian banks sitting near the bottom of the sector's benchmark. This comes despite UBS strategists upgrading European banks to "overweight", as strategists believe that tapering and a return to EPS growth could act as catalysts to unlocking the group's recovery potential; Reuters reported. Banks closed 1.25 percent down overall.
Looking at individual stocks, Aveva agreed to combine with Schneider Electric's software business on Tuesday, creating a London-listed firm worth more than £3 billion ($3.88 billion). Aveva's shares initially rocketed up almost 30 percent on the news, before finishing trade up 25.7 percent, while shares in Schneider Electric were relatively muted, finishing up 0.26 percent.
Germany's Merck KGaA said it would consider selling its consumer health business. Its shares came off its highs yet finished trade up 2.37 percent.
Meanwhile, French telecom firm Orange and U.K. consumer goods firm Reckitt Benckiser closed near the bottom of the STOXX 600, off 2 percent and 2.7 percent respectively. This comes after Exane BNP Paribas cut its target price on Reckitt Benckiser and cuts its rating on Orange to "underperform".
Oil and gas was the second best performing sector on Tuesday, closing up 0.69 percent. This comes as oil prices posted sharp gains during trade on the back of news that refineries in the Gulf of Mexico - that were shut by Hurricane Harvey - were starting to reopen.
At the market close, Brent was up over 2 percent at $53.64 per barrel, and U.S. crude was at $48.97, up over 3 percent.