This was CNBC's live blog covering European markets.

European markets closed broadly higher on Tuesday, breaking a four-day losing streak fueled by red-hot global tariff tensions.

The regional Stoxx 600 index closed 2.72% higher at 486.9 points. Insurance stocks were 4.08% higher on the day, financial services were up 3.89% and travel was 3.85% higher.

It comes after the Stoxx 600 index ended Monday's session around 4.5% lower, falling to its lowest closing level since January 2024, following days of market volatility and extreme selling.

The equity rebound was reflected globally on Tuesday, kicked off by Asia-Pacific markets and later joined by U.S. stocks. Amid some dip buying, investors also appeared hopeful the U.S. will begin talks that could lead to deals that lower the duties over time.

The world has been rocked by the frequent updates around U.S. President Donald Trump's tariffs regime in recent days, and despite stock gains, tensions between the U.S. and its trading partners do not appear to be easing.

Speculation on Monday about a potential tariff pause was quickly shut down by the White House, while Trump threatened to hike tariffs on China by another 50% unless it scrapped retaliatory duties. Beijing last week imposed a 34% tariff on American products in response to Trump announcing his full list of so-called reciprocal tariffs.

Overnight, China's Commerce Ministry said it "resolutely opposes" Trump's threat of escalating tariffs and vowed to take countermeasures to safeguard its own rights and interests.

Also on Monday, European Commission President Ursula von der Leyen said the EU had offered Trump a "zero-for-zero tariffs" deal for industrial goods, and reiterated that the bloc was keen to negotiate but was also prepared to impose countermeasures. Trump promptly rejected the EU's 0% tariff offer, however.

— CNBC's Anniek Bao contributed to this report.

Europe stocks close higher

European stock markets closed higher on Tuesday, with the Stoxx 600 index closing up 2.72%.

Gains were broad-based, with France's CAC 40 and Germany's DAX both up around 2.5%, as the U.K.'s FTSE 100 rose 2.7%.

— Jenni Reid

‘No question’ that recession risks have risen, says economist

Paul Donovan, chief economist at Global Wealth Management, discusses the impact of U.S. tariffs on global markets.

U.S. stocks jump Tuesday morning

U.S. stocks began Tuesday's session in the green.

The S&P 500 advanced 3.2%. The Dow Jones Industrial Average climbed 3.5%, while the Nasdaq Composite gained around 3.6%.

— Hakyung Kim

BOE unlikely to 'overreact' to tariffs as British pound is likely to recover

The Bank of England is unlikely to overreact and press the "panic button" toward aggressive monetary policy easing as a result of the British currency's underperformance amid U.S. tariffs, according to Matthew Ryan, head of market strategy at global financial services firm Ebury.

"While sterling has far from been among the worst performing majors (that mantle lies solely with the Australian dollar), the U.K. currency has tanked against the euro in the last few sessions (GBP/USD slumped below the 1.17 level yesterday from 1.20 on Wednesday)," Ryan said.

Sterling was up 0.4% against the dollar at 12:18 p.m. in London. It was also up almost 0.2% against the euro.

"The U.K. is pretty isolated from the tariffs given its low exposure to global demand (particularly the U.S. and China) and the fact that the direct tariffs themselves are low at just 10%. Yet, investors appear to be punishing GBP given its high-risk status and elevated interest rates, which allow room for aggressive easing under a scenario where the Bank of England presses the panic button on the growth outlook."

Ebury is "confident that this underperformance won't last for too much longer," Ryan noted.

"We don't expect the MPC to overreact to the tariffs, and the economic hit will probably transpire to be relatively minimal (troubles at home probably carry greater weight for Britain's economy in our view)," he added.

— Sawdah Bhaimiya

‘The tariff lessons from history are not good,’ analyst warns

James Moore, head of capital goods research at Redburn Atlantic, warns of U.S. stagflation and goods dumping in Europe as the Trump administration's tariffs escalate.

UK stocks rally

London's FTSE 100 led gains among Europe's major bourses on Tuesday, trading 1.6% higher by 11:33 a.m. U.K. time.

The U.K.'s FTSE AIM All-Share index was up by almost 2%.

London-listed shares of British Airways owner IAG jumped 5.1%, while Rolls-Royce added 5% and Games Workshop rose by 4.2%.

— Chloe Taylor

European drink makers rally

European alcohol producers made broad gains on Tuesday morning, after news emerged that the EU had exempted whiskey, wine and dairy products from its 25% retaliatory tariffs on U.S. goods.

Diageo, which makes Johnnie Walker, Smirnoff and Guinness, was up by around 1% at 9:47 a.m. in London, while AB InBev, the world's largest brewer, gained 1.6%.  

Carlsberg and Pernod Ricard, both up by 1%, and Remy Cointreau, up 2.5%, were also among the industry's top movers.

— Chloe Taylor

UBS advises investors not to sell stocks

In a note to clients on Tuesday, strategists at Swiss investment bank UBS argued that now is not the time to cash out of the stock market.

"Even though the market may move even lower in the near term, periods of market stress have historically and consistently offered long-term rewards for diversified investors who look through near-term volatility, stay the course, and/or put fresh money to work," they said.

They noted that there have been 12 occasions since 1945 when the S&P 500 fell by 20% from its peak, all of which had seen the index return significant returns in the subsequent five years.

"Staying invested also reduces the risk of missing significant "up days" for financial markets, which often occur during periods of high volatility," UBS' strategists added.

Strong hedges in the current environment include medium-term bonds, gold, hedge funds and capital preservation, they said.

— Chloe Taylor

Defense stocks rebound from sharp sell-off

Europe's Stoxx Aerospace and Defense index gained around 4% by 9:12 a.m. in London on Tuesday.

It put the index on course to end a four-day losing streak, during which it notched single-session losses of up to 8%.

Sweden's Saab, up 6.7%, Germany's Renk Group, up 6.5%, and Britain's Rolls-Royce, up 5.3%, were among the top movers in the sector on Tuesday morning.

— Chloe Taylor

Markets could stay fragile for weeks: AJ Bell

"After multiple punishing sessions, stock markets appear to have started their road to recovery," Russ Mould, investment director at AJ Bell, said in a note on Tuesday.

However, he warned investors to take a cautious approach to the U-turn across global stock markets.

"It's dangerous to think a massive rally will definitely happen, given how [U.S. President Donald] Trump is unpredictable, but the 'just imagine' thought will now be firmly engrained in investors' minds," Mould said.

"Investors need to take each day as it comes … markets could stay fragile for days and weeks to come. It would only take a new sign of aggression from Trump or a trading partner fighting back hard to cause upset again. Market recoveries can quickly lose momentum if investors lose faith in a remedy to the situation that caused the original sell-off."

— Chloe Taylor

Euro moves higher

The euro was 0.4% higher against the U.S. dollar by 8:43 a.m. in London, trading at around $1.095.

The currency jumped higher in the immediate aftermath of Trump's reciprocal tariffs announcement on Wednesday, but pared some of those gains on Monday.

— Chloe Taylor

European markets open higher

European stocks made broad gains on Tuesday, reversing course after closing sharply lower on Monday.

The pan-European Stoxx 600 was 1.3% higher at 8:16 a.m. in London. Every sector barring telecom was in positive territory, with all major bourses edging higher.

London's FTSE 100 and the French CAC 40 each added around 1.4%, while the German DAX gained 0.8%.

— Chloe Taylor

China says it will ‘fight to the end’ after Trump threatens 50% additional tariffs

China's Commerce Ministry said it "resolutely opposes" U.S. President Donald Trump's threat of escalating tariffs, and vowed to take countermeasures to safeguard its own rights and interests.

The comments came after Trump said he would impose an additional 50% duties on U.S. imports from China Wednesday, if Beijing does not withdraw the 34% tariff it imposed on American products last week.

"The U.S. threat to escalate tariffs on China is a mistake on top of a mistake," the statement said, according to a CNBC translation. "China will never accept it. If the U.S. insists on its own way, China will fight to the end."

Read the full story here.

—Anniek Bao

Trading volume boomed as Trump’s tariffs shook stocks for a third day

Market participants traded about 29 billion shares on Monday, resulting in the highest volume day in at least 18 years, according to FactSet and Nasdaq Trader.

It was a rocky day for stocks, with the S&P 500 briefly touching bear market territory and the Dow Jones Industrial Average seeing a swing of 2,595 points from its low to the high of the session.

Monday's volume surpassed Friday's volume of 26.77 billion shares, as well as the 10-day average volume of 16.94 billion shares.

— Gina Francolla, Darla Mercado