European stocks closed down on Tuesday, as disappointing US data dampened positive sentiment earlier brought on by better than expected American blue-chip earnings and news that China may move to stimulate its massive economy.
After an initial positive session, European stock markets entered negative territory in afternoon trade.
"European markets did start the day on the front foot this morning buoyed by a positive Asia session," CMC Markets UK analyst Michael Hewson said, but added that "the only economic data of note was the Richmond Fed manufacturing index for July, which missed expectations by a mile".
London's FTSE 100 index of leading shares finished the day 0.39 percent lower to 6,597.44 points, while Frankfurt's DAX 30 shed 0.20 percent to 8,314.23 points and the CAC 40 in Paris dropped 0.43 percent to 3,923.09 points.
The Spanish market bucked the trend, however, with the IBEX 35 index jumping 1.38 percent to end at 8,116.50 points after an upbeat short-term state bond auction that eased fears over the debt-ridden eurozone nation.
Earlier Tuesday, comments made by Chinese Premier Li Keqiang boosted the stocks.
Quoted by a state-backed newspaper, Li said the "bottom line for economic growth is seven percent". The remarks were then interpreted by analysts as a hint that Beijing would move to prop up growth.Dealers said Li's comments also sent the mining sector soaring since China is a key consumer of metals.
In London, shares in commodities giant Glencore Xstrata rallied 5.09 percent to 282.7 pence, Anglo American jumped 2.14 percent to 1,435 pence and Rio Tinto gained 3.36 percent to 3,000 pence.
In Paris, shares in industrial and media conglomerate Bouygues rose by 6.85 percent to 22.00 euros because its subsidiary Bouygues Telecom is in exclusive talks with SFR on sharing some mobile phone network infrastructure.
STMicroelectronics stock however plunged 10.42 percent to 6.73 euros on a doubled-second-quarter loss to $152 million (115 million euros).
-- Chinese 'boost to risk appetite' --
In Asia, Hong Kong and Shanghai led the gains on the back of Li's remarks
Hong Kong's main stocks index soared 2.33 percent and Shanghai gained 1.95 percent, while Tokyo rose 0.82 percent, Seoul added 1.27 percent and Sydney advanced 0.30 percent.
Analyst Craig Erlam at trading firm Alpari in London said Li's comments suggested "that the ruling party is preparing to announce a new package of stimulus measures which should prevent a hard landing in China in the coming years".
Sentiment was bolstered also by hopes that the Fed would delay winding down its bond-buying after more poor US data, although the disappointing numbers later cast a shadow over the markets.
The National Association of Realtors on Monday said home sales fell 1.2 percent to an annual rate of 5.08 million in June, from a downwardly revised 5.15 million in May.
The average analyst estimate was for a rise to a 5.28 million pace in June.
In noon trade on Wall Street, stocks were mixed, with the Dow Jones Industrial Average adding 0.10 percent, while the broad-based S&P 500 fell 0.11 percent and the tech-rich Nasdaq Composite Index shed 0.38 percent.
Better-than-expected earnings from leading companies such as Dow components DuPont, United Technologies and Travelers failed to keep up the momentum seen in morning trade.
In foreign exchange deals on Tuesday, the European single currency climbed to $1.3215 from $1.3186 late in New York on Monday.
The dollar firmed to 99.74 yen compared to 99.59 yen, while sterling eased to $1.5358 from $1.5360.
On the London Bullion Market, the price of gold increased to $1,333.50 an ounce from $1,327 on Monday.