European stocks closed on a positive note on Tuesday, boosted by better-than-expected earnings from US aluminium giant Alcoa and with the eurozone agreeing to release billions of euros in fresh aid for Greece, dealers said.
The optimism stayed high even as the International Monetary Fund slashed its global economic growth forecast, citing new downside risks in key emerging-market economies and a deeper recession in the eurozone.
Meanwhile, economy and finance ministers from all 28 European Union countries gave the final green light to Latvia to join the eurozone from the start of 2014.
London's FTSE 100 of leading companies finished up 0.98 percent to end at 6,513.08 points and Frankfurt's DAX 30 gained 1.12 percent to 8,057.75 points.
In Paris, the CAC 40 increased 0.52 percent to 3,843.56 points, as investors also welcomed an electricity price tariff deal for energy giant EDF and takeover news in the luxury sector.
The European single currency slid to $1.2774 from $1.2868 late in New York on Monday. Gold increased to $1,255.50 an ounce from $1,235.25 on Monday on the London Bullion Market.
Sterling fell sharply against the dollar and euro, after British manufacturing output and industrial production data disappointed the market.
"European markets are nicely up in green, adding to previous session's gains," said Gekko Markets analyst Anita Paluch.
"Two factors are the reason -- better than expected Alcoa results and its upbeat forecasts that traditionally start the earnings season and the good news from the European front, where Greece secured the 6.8 billion euro tranche of financial aid ... which will prevent the default of the country's debt in August."
Eurozone finance ministers agreed in Brussels late on Monday to unlock the billions of euros in fresh aid for Greece on condition it presses ahead with urgently needed reforms.
The Eurogroup gathering was held ahead of Tuesday's meeting of EU finance ministers, who have rubber-stamped Latvia to become the 18th member of the eurozone with effect from January 1 2014.
Alcoa meanwhile revealed overnight that losses deepened in the second quarter from a year earlier due to lower aluminium prices and special charges related to capacity reduction and a US probe into offshore bribery.
The aluminium producer said it lost $119 million for the quarter ended June 30, compared to a loss of $2.0 million in the year-ago period.
However, excluding the charges, Alcoa reported earnings of $76 million or seven cents per share -- one cent more than analysts' expectations.
"With Alcoa kicking off the earnings season in style last night and numbers topping estimates, there appears to be a degree of confidence about the round of corporate numbers we will be seeing in the coming days," said Mike McCudden, head of derivatives at online broker Interactive Investor.
In Paris on Tuesday, EDF rocketed to the top of the risers board, soaring 9.26 percent to 19.4 euros after the energy giant clinched a new electricity tariff deal.
The French government authorised EDF to lift its electricity prices for residential consumers by 5.0 percent next month, and by the same proportion in August 2014, to offset rising costs.
Separately, French luxury conglomerate LVMH agreed Monday to take control of Italian exclusive ready-to-wear fashion group Loro Piana by buying an 80 percent stake for about 2.0 billion euros ($2.5 billion).
The deal sent LVMH shares 2.06 percent higher to 131.40 euros.
In London, Royal Dutch Shell saw its 'A' share price jump to close 1.53 percent higher at 2,161.5 pence, as investors welcomed the appointment of downstream head Ben van Beurden as its new chief executive with effect from January.
US stocks also traded higher, with the Dow Jones Industrial Average adding 0.48 percent, the broad-based S&P 500 rising 0.66 percent while the tech-rich Nasdaq Composite Index increased 0.55 percent.