Europe shares close higher on upbeat data

European shares closed higher on Tuesday, following data for the euro zone which boosted hopes the currency bloc is heading out of recession, and signs of a housing recovery in the U.K.

There was a broad rally across the continent, with the majority of industry sectors posting gains. The pan-European FTSEurofirst 300 Index provisionally closed up 0.5 percent at 1,235.50 points.

German economic sentiment bounced back in August to a four-month high on Tuesday, data released by think tank ZEW showed. The important economic sentiment index for August climbed to 42.0, according to official data. This was higher than a figure of 36.3 for July, and managed to beat estimates in a Reuters poll of 40.0.

Industrial output data for the euro zone also showed a uptick. The figure for June rose 0.7 percent from the month before, which just missed expectations, and on a yearly basis increased by 0.3 percent.

This came ahead of official growth data for the currency bloc, which will be released on Wednesday. Economists expect an expansion of 0.2 percent in the region's quarterly gross domestic product (GDP) — the first growth in the area since 2011.

(Read More: German sentiment brightens as Euro downturn eases)

In the U.K., inflation slipped in July, according to the U.K.'s Office of National Statistics (ONS) on Tuesday. Consumer prices inflation fell to 2.8 percent in July, from the previous month's 2.9 percent. Markedly lower prices for clothing and footwear in summer sales helped push inflation lower.

In addition, a survey from the Royal Institution of Chartered Surveyors showed that U.K. house prices were rising at their fastest pace in seven years, giving the FTSE 100 a bounce, provisionally closing up 0.5 percent.

(Read More: UK inflation eases as house prices rise)

Meanwhile, U.S. stocks traded near their session lows on Tuesday afternoon, extending their losses for a third-straight session, following a tepid retail sales report.

Asian equity markets ended at session highs on Tuesday, with Japan's benchmark index closing 2.6 percent higher. The yen weakened after a report said Japanese Prime Minister Shinzo Abe was considering introducing corporate tax cuts to attract foreign capital, in an attempt to offset the impact of a sales tax hike.

In stocks news, GAM Holding was one of the biggest risers of the session, with shares closing up roughly 9.74 percent after the asset manager reported improved profit margins in the first half of 2013.

Shares of Danish jewelry firm company Pandora dropped 2.34 percent, despite reporting a second-quarter profit jump on strong sales of its new products.

Shares of insurer Resolution closed up 1.7 percent after its first-half results were cheered by investors, with Barclays referring to its "strong" performance.

Energy firm E.On announced second-quarter results that beat expectations; shares closed up by 2.1 percent.

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