European stocks closed higher on Tuesday as euro zone PMI (purchasing managers' index) readings showed the economic downturn slowing in June, while investors reacted to a surge of coronavirus cases in the U.S. and elsewhere.
The pan-European Stoxx 600 provisionally ended up 1.3%, with autos climbing over 3% to lead gains as all sectors and major bourses held in positive territory.
The boost to stocks comes after White House trade advisor Peter Navarro clarified that the U.S.-China trade deal is not over, following an interview with Fox News in which he appeared to suggest otherwise, prompting U.S. stock futures to plunge.
Later, Navarro clarified that the U.S.-China trade deal is not over, saying in a statement that his comments had been "taken wildly out of context." "They had nothing at all to do with the Phase I trade deal, which continues in place," he added. President Donald Trump also tweeted that the existing trade deal remains in place. Stock futures recovered earlier losses following the comments.
Meanwhile, the coronavirus pandemic continues to be the main focus for investors as a number of states in the U.S. continued to report a rise in new cases and hospitalizations. The World Health Organization has reported record rises in several countries in the last few days, and has denied claims that increased testing is the sole driver behind higher case numbers.
Germany reimposed lockdown measures in a district within the country's most populous state, North-Rhine Westphalia, on Tuesday following a substantial outbreak centered around a slaughterhouse.
IHS Markit's flash euro zone PMI (purchasing managers' index) readings on Tuesday showed a further easing of the bloc's historic economic downturn in June. The composite PMI, widely seen as a credible gauge of economic health, increased to 47.5 in June from 31.9 in May and a record low 13.6 in April. A reading of 50 separates expansion from contraction.
Wirecard shares regained more than 19% after consecutive plunges amid an ongoing accounting scandal involving a missing $2.1 billion on its balance sheet. Former CEO Markus Braun, who resigned on Friday, was arrested Tuesday on charges of inflating the company's balance sheet, according to Munich prosecutors.
Dutch life insurer Aegon jumped 9% after Berenberg initiated the stock with a "buy" rating and the company announced the appointment of Duncan Russell as its new Chief Transformation Officer.
Bayer added 6.5% after German newspaper Handelsblatt reported that the pharmaceutical and life sciences giant is close to agreeing an $8-10 billion settlement over claims that its glysophate-based weedkiller caused cancer.
At the bottom of the European blue chip index, Hikma Pharmaceuticals fell 5% after Boehringer Ingelheim sold its stake in the British group.
CNBC's Maggie Fitzgerald and Eustance Huang contributed to this report.