The Stoxx 600 index closed provisionally higher at 0.23% on Tuesday in London. The regional FTSE 100 was up 0.6%, France's CAC 40 rose by 0.7%, while Germany's DAX was higher by 1%.

— Sawdah Bhaimiya

The International Monetary Fund raised its expectations for the growth of the global economy, according to its latest World Economic Outlook report, published Tuesday.

Global growth is expected at 3% in 2025 and 3.1% in 2026, which is an upward revision from its report in April.

"What we're seeing is a global economy that's proving a little bit more resilient than what we were expecting back in April," IMF's chief economist, Pierre-Olivier Gourinchas, told CNBC. He explained that there are "three main things" behind this resilience.

"The first one is that the tariff levels that we are currently facing is lower than what we were expecting back in April. There's been a pause that was announced by the U.S.," Gourinchas said.

"There have been a number of trade deals whose details are not fleshed out fully yet, but are pointing towards lower tariff levels than were initially announced back in April, and so that's basically easing the tariff pressure, if you want, and that's helping the global economy," he added.

Gourinchas also noted an easing of financial conditions and several countries frontloading exports.

— Sawdah Bhaimiya

The S&P 500 and Nasdaq Composite hit fresh record-highs at the opening bell on Tuesday, as investors await Federal Reserve's interest rate decision and also parse rolling corporate earnings.

The broad market index added 0.2%, while the Nasdaq climbed 0.5%. The Dow Jones Industrial Average hovered near the flatline.

— Brian Evans

Philips continued to lead gains on the Stoxx 600 index, notching 10.7% at 2:43 p.m. in London, after the consumer healthcare group raised its outlook for the 2025 financial year.

Its forecasting its adjusted earnings before interest, taxes and amortization (EBITA) profit margin to be in a range between 11.3% to 11.8% for the year, up from 10.8% to 11.3% for the previous year.

"We estimate that this implies a 3% upgrade to consensus adjusted EBITA for FY2025 at the mid-point," UBS wrote in a note.

This was after the company shared improved tariff outlooks for the year. It now expects a hit of 150 to 200 million euros ($230.1 million) from tariffs, down from the 250 to 300 million euros it had previously estimated.

UBS said it's expecting investors to react positively. "Many investors feared a top-line downgrade and a soft order intake, neither of which have materialised, whilst the quarter itself was exceptionally strong from a margin perspective," it said.

— Sawdah Bhaimiya

The International Monetary Fund raised its expectations for the euro area economy, saying it was now forecasting 1% growth this year.

In April's World Economic Outlook report, the IMF had been forecasting a 0.8% expansion.

The IMF said the revision was "largely driven by the strong GDP [gross domestic product] outturn in Ireland in the first quarter of the year, although Ireland represents less than 5 percent of euro area GDP."

Ireland's GDP jumped 7.4% in the first quarter.

"The upward revision for 2025 reflects a historically large increase in Irish pharmaceutical exports to the United States resulting from front-loading and the opening of new production facilities," the IMF said.

The economic growth outlook for 2026 was unchanged from the previous forecast, coming in at 1.2%.

The IMF tweaked its global growth forecast for 2025 higher, to 3%, while the GDP projection for the U.K. was also raised slightly to 1.2%, from 1.1% previously.

"Stronger-than-expected front-loading in anticipation of higher tariffs; lower average effective US tariff rates than announced in April; an improvement in financial conditions, including due to a weaker US dollar; and fiscal expansion in some major jurisdictions" all contributed to the global outlook being raised, the IMF said.

— Sophie Kiderlin

Novo Nordisk shares are now around 20% lower, paring losses of up to 26%, after the company slashed its full-year sales outlook.

It now sees sales growth of 8% to 14% at constant exchange rates, down from a prior target of 13% to 21%.

The Danish drugmaker also named Maziar Mike Doustdar, an internal candidate, as its new CEO after the surprise ousting of Lars Fruergaard Jørgensen in May.

— Karen Gilchrist, Jenni Reid

Danish pharmaceutical giant Novo Nordisk has cut its full-year sales and profit guidance, citing weaker growth expectations for its Wegovy obesity drug in the key U.S. market.

Shares were down 17% at 12:30 p.m. London time (7:30 a.m. ET), shortly after the announcement.

Read more from CNBC's Karen Gilchrist here.

Several European leaders have been critical of the EU's trade deal with the U.S., with French Prime Minister François Bayrou describing it as a "submission." Irish Minister of State Neale Richmond said the export-reliant country was "not exactly celebrating."

The bloc has agreed to pay a 15% tariff on most exports to the U.S., alongside making large investments in American energy products and military equipment, avoiding a 30% tariff rate which would have come into place on August 1. 

Analyst reaction has been similarly underwhelmed. Bank of America called the deal "bad for the economy," but conceded it "pares tail risks and reduces uncertainty" over relations between the two economies. However, Wolfe Research called it "bullish," saying it had expected the U.S. side "would be reluctant to reduce' tariffs on autos."

— Michael Considine, Jordan Butt

Mohamad Al-Saraf, associate in fixed income and FX research at Danske Bank, said the outline deal "appears more favourable for the U.S. relative to the euro area."

"Recent price action suggests the USD sell-off may have stalled, with investors cautious of being caught wrong-footed, as broad USD positioning remains stretched on the short side," Al-Saraf added.

However, some analysts see support for the euro looking ahead, in part because of monetary policy. Deutsche Bank on Tuesday updated its call and now sees the European Central Bank holding interest rates at the current 2%, with further easing "now a risk scenario rather than baseline."

While the Federal Reserve is expected to keep rates on hold at its meeting this week, analysts at UBS say that U.S. tariff deals wrapping up with several key trading partners and a shaky economic outlook could give the central bank more confidence to cut in the months ahead.

— Jenni Reid

European markets are shaking off their EU-U.S. trade deal blues as a series of better-than-expected earnings dominate the picture. The Stoxx 600 index is 0.57% higher, with both France's CAC 40 and Germany's DAX up by around 1%.

Philips is still leading gains, up 10%, after the consumer health tech group said it now expects a lower tariff hit than previously forecast.

"Overall, we have momentum, we see that we can take that momentum into the second half and we that have the clarity on tariffs now also to further mitigate what is out there," CEO Roy Jakobs told CNBC's "Squawk Box Europe" on Tuesday.

EssilorLuxottica is another top performer, up 6%, after reporting 7.3% revenue growth in the second quarter as well as the first half, as demand for artificial intelligence glasses surged. Sales of its Ray-Ban Meta glasses more than tripled in the first six months of the year.

Drugmaker AstraZeneca ticked 1.75% higher after its own second-quarter earnings beat.

Shares of Stellantis are down 2.1%, despite the troubled automotive giant reinstating its financial guidance and saying it expects a gradual recovery over the coming months.

— Jenni Reid, Jonathan Stayton, Karen Gilchrist

Shares of Philips soared nearly 14% at the market open, after the Dutch consumer healthcare group raised its full-year margin outlook, saying it now expects a hit of 150 to 200 million euros ($230.1 million) from tariffs, down from the 250 to 300 million euros it had previously estimated.

Sales in the second quarter came in at 4.3 billion euros, in-line with expectations. 

— Matt Ward-Perkins, Jenni Reid

British bank Barclays beat profit expectations and announced a £1 billion ($1.33 billion) share buyback as market volatility boosted investment banking revenues.

Pre-tax profit beat estimates at £2.5 billion ($3.34 billion) in the second quarter, compared with a mean LSEG forecast of £2.23 billion. Group revenues met analyst projections of £7.2 billion.

Read more here.

— Jenni Reid

AstraZeneca on Tuesday posted better-than-expected second quarter earnings, driven by demand for key cancer and biopharmaceutical products, and reiterated its commitment to expanding the business in the U.S.

The Anglo-Swedish pharma firm posted revenues of $14.46 billion over the three-month period to June 30, ahead of the $14.07 billion estimated by analysts in an LSEG poll.

Quarterly adjusted core operating profit came in at $4.58 billion versus $4.48 billion anticipated.

The FTSE 100 company maintained its full-year forecast for revenues to rise by a high single-digit percentage, despite geopolitical challenges, and cited its ambitions to grow its U.S. footprint and to deliver $80 billion revenue by 2030.

AstraZeneca said last week it plans to invest $50 billion in bolstering its U.S. manufacturing and research capabilities by 2030, becoming the latest pharmaceutical firm to ramp up its stateside spending in the wake of U.S. trade tariffs.

— Karen Gilchrist

Good morning from London.

European stock markets are heading for a higher open today, according to IG data, with major bourses heading for gains of around 0.2%.

On Monday, initial optimism over the EU-U.S. framework trade deal faded by the end of the session to leave the Stoxx 600 index at a 0.23% loss. Investors will continue to hunt for any clarity on the outlook today — particularly as uncertainty remains for sectors including pharmaceuticals, and key products like spirits.

"We see the tentative trade deal with the EU as pretty much completing the run of good trade news that has lifted global confidence and equity markets, and weakened the [U.S. dollar]," Standard Chartered macro strategist Steve Englander said in a Monday note.

"The deals are a negative from a global growth perspective but appear to be something that US trading partners can live with."

Earnings are also in focus, with British bank Barclays reporting shortly. Results are also out from L'Oréal, AstraZeneca and Ferrovial, along with Boeing, Starbucks, Visa, PayPal and more Stateside.

— Jenni Reid