European stocks drifted up on Tuesday as traders awaited key data and looked ahead to a US Federal Reserve monetary policy meeting.
London's FTSE 100 index of leading companies rose 0.71 percent to 6,339.19 points, hitting its highest close since May 2008.
Frankfurt's DAX 30 added 0.20 percent to 7,848.57 points, and in Paris the CAC 40 gained 0.13 percent to 3,785.82 points.
In foreign exchange trading on Tuesday, the European single currency rose to $1.370 from $1.3454 late in New York on Monday. On the London Bullion Market, gold prices increased to $1,663.50 an ounce from $1,656.50.
"Heading into the close the FTSE has once again risen above 6,300, helped by good earnings figures and improvement in US home prices," said IG market analyst Chris Beauchamp.
US stocks traded mixed with the Dow Jones Industrial Average up 0.42 percent in midday trading, the S&P 500 rising 0.33 percent, while the tech-rich Nasdaq Composite Index was off 0.03 percent.
The world's biggest pharmaceutical company, Pfizer, reported a big jump in fourth-quarter earnings to $6.3 billion as cost-cutting efforts plus a gain from an asset sale helped offset the loss of exclusivity of a blockbuster cholesterol drug.
Pfizer's shares gained 3.0 percent to $27.65.
A key gauge of US home prices, the Case-Shiller Home Price Index rose 5.5 percent in November on an annual basis, with a seasonally adjusted monthly gain of 0.6 percent.
"In sum, the rosy attitude that has prevailed on markets since 1 January remains with us," said Beauchamp.
European equities and the euro have rallied in recent days, with Frankfurt hitting a five-year high and the euro at 11-month peaks versus the dollar after positive German data and as banks repay early their emergency ECB loans.
"It appears that the global economy is on the mend, and more clues on this will come later in the week with US GDP and then non-farm payrolls," he added.
Traders are also eagerly awaiting the decision of the US Federal Reserve's Monetary Policy Committee on Wednesday.
"The Fed statement tomorrow is likely to be the most eagerly anticipated news of the week," said Rebecca O'Keeffe, head of investment at online brokerage Interactive Investor.
"At their last meeting they were clearly considering when to terminate QE3 (stimulus), so the market will be looking for any signs of this and, as with most Fed statements, trying to read between the lines."
On Europe corporate front, shares in Royal Bank of Scotland plunged 5.98 percent to 345.8 pence on a report that it could face a £500-million ($786-million, 585-million-euro) fine from British and US authorities for its role in the Libor rate-rigging affair.
The Wall Street Journal, citing people briefed on negotiations, added that US authorities were pushing for a settlement of allegations that would result also in an RBS division pleading guilty to criminal charges.
The Libor rate is used as a benchmark for global financial contracts worth about $300 trillion, and revelations that it had been rigged have harmed the reputation of the City of London financial centre. British bank Barclays and Swiss lender UBS have already been hit with large fines.
Elsewhere on Tuesday, shares in Anglo American rose 0.29 percent to 1,877.9 pence despite the miner announcing a write-off totalling $4.0 billion (3.0 billion euros) caused by delays at its Minas-Rio iron-ore mining project in Brazil that have sent costs soaring.
"Anglo American's $4.0-billion write down on Minas Rio appears in line with expectations," analysts at Investec financial group said.
The mining giant, which has been hit in recent months by slumping platinum output owing to deadly strike action by workers in South Africa, said that it would "record an impairment charge of $4.0 billion" in its 2012 earnings.
Asian stock markets mostly closed higher on Tuesday, with Tokyo climbing 0.39 percent and Sydney jumping 1.11 percent as dealers in Australia returned from a long weekend break.
Despite the gains, traders said there was a certain amount of caution as the corporate earning season begins this week in Japan.