European stocks rose while the euro fell in midday trading on Tuesday as investors looked ahead to a rate-setting meeting of the US Federal Reserve and digested robust German economic data.
Company focus was on the insurance sector as Prudential and Munich Re reported earnings.
London's benchmark FTSE 100 index of leading shares climbed 0.88 percent to 5,944.47 points in the British capital.
Frankfurt's DAX 30 won 0.96 percent to 6,967.79 points and in Paris the CAC 40 gained 1.03 percent to 3,526.21 approaching the half-way mark.
In foreign exchange deals, the European single currency fell to $1.3109 from $1.3147 late in New York on Monday.
All eyes were on the US central bank's Federal Open Market Committee (FOMC), which is unlikely to budge from its easy-money stance when its meets later on Tuesday, despite an improving American jobs market.
"Ahead of the FOMC meeting later this afternoon, equity markets have been buoyant taking their lead from Wall Street's advances yesterday," said CMC Markets senior strategist Brenda Kelly.
"The release of the German ZEW sentiment data has also given the markets a boost (by) beating the expectations by a long margin."
German investor confidence surged to the highest level for 21 months in March, amid growing optimism that Europe's top economy can shrug off the worst of the debt crisis, data showed on Tuesday.
The ZEW think tank's economic expectations index rose by 16.9 points in March to stand at plus 22.3 points, the highest level since June 2010, the organisation said in a statement.
In German company news, the share price of Munich Re rose 2.9 percent to 111.85 euros after the the world's leading reinsurer said it expects a three-fold increase in profits this year to about 2.5 billion euros ($3.3 billion) in a recovery from last year.
In 2011, Munich Re saw its bottom-line net profit slashed to just 702 million euros from 2.4 billion euros a year earlier as a result of a string of natural catastrophes and losses connected with the eurozone debt crisis.
In London, shares in British insurer Prudential gained 1.65 percent to 740 pence after the group announced that net profits rose four percent to £1.49 billion (1.77 billion euros, $2.33 billion) in 2011 on Asian growth and from the level a year earlier.
Asian stock markets meanwhile closed mostly higher on Tuesday, with traders unfazed by fresh easing measures from Japan's central bank.
The Bank of Japan on Tuesday decided to boosted a loan programme by almost $25 billion to kickstart the domestic economy.
The fresh easing measures follow the rate-setting board's move last month to pump 10 trillion yen ($130 billion) more cash into the economy.
The bank also said it would hold interest rates at near zero.
Fears of a sharp slowdown in China have also risen after the country posted its biggest trade deficit in at least 12 years on Saturday due to weakening export growth, while inflation came in at its lowest pace since June 2010.