European shares rose on Tuesday, led by cyclical sectors responding to some improvement in economic sentiment as the S&P 500 hit a record high on Wall Street and better earnings helped auto makers.
The STOXX Europe 600 rose 0.5 per cent, tracking US shares higher after the S&P 500 hit a new record high.
It was up for a fourth straight session, having ended Monday with its highest close since Britain voted to leave the European Union.
Risk-sensitive sectors such as autos and banks were the top gainers, up 2.7 per cent and 1.1 per cent, respectively.
Carmaker Daimler rose 4.1 per cent after second quarter results beat expectations, helped by higher earnings in van and bus operations.
“We reiterate our Buy on Daimler on the expected outperformance in passenger cars (further market share gains, best-in-class margins), especially over BMW,” analysts at UBS said in a note.
UniCredit led financial shares higher, as Italy's volatile bank shares found favour.
UniCredit rose 6.8 per cent, the top STOXX 600 riser, after it successfully placed 10 per cent of its online broker FinecoBank at 5.40 euros per share, pocketing 328 million euros ($363 million).
Although peripheral euro zone banks rose, Norway's DNB fell 6.5 percent to a 3-month low after warning of bigger loan losses this year and reporting higher-than-expected Q2 impairments due to an ongoing slump in Norway's key oil sector.
Defensive stocks that benefit more in times of economic pessimism were on the back foot, with utilities and health care stocks the biggest sectoral fallers.
Shire bucked the trend in the weaker pharmaceutical sector by rising 3 per cent after it won US approval for its most important new medicine, a treatment for dry eye disease.
Appetite for stocks was buoyed by a 3 per cent rise in Japan's Nikkei on hopes of extensive new stimulus from the government.
The only stock index in negative territory was the FTSE 100 , which has a defensive composition and suffers from a strong pound.
British mid-caps rose again and the pound was set for its biggest one day gain since before the Brexit referendum after Theresa May won the race to succeed David Cameron as Prime Minister, helping ease uncertainty over the British political outlook.