European shares closed sharply lower on Tuesday, amid fears of a U.S.-led military strike in response to a suspected chemical attack in Syria.
The pan-European FTSEurofirst 300 Index provisionally closed down 1.5 percent at 1,204.76 points. The Euro Stoxx 50 volatility index rose 23.8 percent to 22.17 points, its biggest daily rise since February 4.
Fears of a potential military attack against Syrian President Bashar al-Assad's regime were fueled after U.S. Defense Secretary Chuck Hagel told the BBC on Tuesday that the military is "ready to go" if President Barack Obama orders action in Syria. It came a day after U.S. Secretary of State John Kerry said all nations must stand up for accountability on the use of chemical weapons in Syria.
Meanwhile, NBC News reported that the U.S. could launch a missile strike against Syria "as early as Thursday."
All three U.S. major indices were in negative territory in early trade on Tuesday.
(Read More: Global stock markets slide amid double threat)
"Syria has taken over the mantle of market concern," said Nick Lewis, head of risk at London Capital Group. "The increasing political pressure in the States to intervene led U.S. markets lower, and Europe is following."
In the U.K., Prime Minister David Cameron announced that he had recalled Parliament from its summer break to discuss possible responses to the chemical attack on Thursday. Downing Street said discussions are continuing with international allies on what to do next, and that the armed forces were drawing up contingency military plans.
French President Francois Hollande also added his voice to the debate, stating that a chemical attack could not go unanswered.
(Read More: Syria premium seen building in oil, gold)
Meanwhile, a survey by the Confederation of British Industry on Tuesday showed that business activity in the U.K. services sector grew to its highest level since 2007, with business confidence also rising strongly.
(Read More: UK services sector strongest since pre-crisis boom)
The upswing in German business sentiment continued in August, according to data from Germany's Ifo Institute released on Tuesday. The Ifo Business Climate index rose in August to 107.5, above expectations of 107.0 in a Reuters poll. The reading in July was 106.2.
Greece's ASE index slumped 4.1 percent over fresh concerns about its bailout plan. German Finance Minister Wolfgang Schaeuble said in an newspaper interview on Tuesday that the International Monetary Fund's estimate that Greece needs a third bailout worth 11 billion euro ($14.7 billion) was realistic.
(Read More: German business sentiment hits 16-month high)
In stocks news, shares of Antofagasta closed down roughly 3.33 percent after it reported disappointing first-half revenue that came in 12.1 percent lower on the same period last year.
(Read More: Antofagasta feels pain of falling copper prices)
Shares of U.K. energy services firm Petrofac jumped by around 8.5 percent after it said it expected a stronger second half of the year, despite a fall in revenues in its first half earnings.
Follow us on Twitter: @CNBCWorld