LONDON — European stocks closed higher Tuesday as optimism over coronavirus vaccines appeared to outweigh concerns over fresh shutdowns across the continent.
The pan-European Stoxx 600 closed up by 0.25%, with autos climbing 3% to lead the gains.
Still, investors are closely watching measures to curb a sharp rise in infections in Europe, with Germany and the Netherlands announcing tighter restrictions over Christmas.
On Monday, the U.K. government announced that London is to move into England's highest tier of Covid-19 restrictions. It cited increased infection rates that may be partly linked to a new variant of the coronavirus that could be spurring a rise in cases in southern England.
On Wall Street, stocks traded higher as market sentiment was helped by progress on U.S. stimulus talks and as Covid-19 vaccines began to roll out across the country.
New York City Mayor Bill De Blasio warned earlier Monday that the city could experience a "full shutdown" soon.
In Brexit news, negotiations between the EU and U.K. aimed at reaching a trade deal continued to weigh on investors' minds.
There seemed to be some positive momentum to talks on Monday with Ursula von der Leyen, president of the European Commission, saying there was some "movement" over sticking points.
In terms of individual share price action, German automaker Volkswagen saw its shares gain 7.6%, rising to the top of the Stoxx 600 after CEO Herbert Diess received unanimous support from the board following a power struggle with the company's labor boss.
Switzerland's SoftwareONE climbed 6.7% after expanding its leadership team.
Umicore shares climbed 6.6% after the Belgian materials technology company upgraded its guidance.
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- CNBC.com staff contributed to this report.