• The pan-European Stoxx 600 ended the session up by about 0.3%, with travel and leisure shares adding 1.5% to lead gains.
• Vodafone and Iliad led a decline in telecoms stocks Tuesday following the release of disappointing earnings numbers.
• Euro zone GDP declined by 0.6% in the first quarter, confirming the bloc entered a technical recession to start the year.

LONDON – European stocks closed higher on Tuesday as global markets attempted to break out from the gloomy sentiment seen at the start of the trading week.

The pan-European Stoxx 600 ended the session up by about 0.2%, with travel and leisure shares adding 1.6% to lead gains while telecoms dropped 1.2% on the back of post-earnings falls for Iliad and Vodafone.

The day's trading indicated a more positive tone than on Monday, when stocks closed lower as global investors weighed concerns over a rise in inflation and an increase in coronavirus cases, largely attributed to the spread of a variant that emerged in India.

Euro zone gross domestic product (GDP) declined by 0.6% in the first quarter, according to Eurostat data published Tuesday, in line with initial estimates and confirming that the 19-member bloc entered a technical recession to start the year.

Flash first-quarter employment figures also showed a 0.3% quarterly decline across the euro zone, while U.K. unemployment fell to 4.8% between January and March as employers seemingly prepared for the easing of restrictions.

On Wall Street, major U.S. stock indexes fluctuated on Tuesday after data showed housing starts dropped sharply last month. Housing starts tumbled 9.5% to a seasonally adjusted annual rate of 1.569 million units last month, the Commerce Department said on Tuesday. Economists polled by Dow Jones had forecast starts falling to a rate of 1.7 million units in April.

Better-than-expected earnings from Home Depot and Walmart helped support sentiment.

The moves came after lingering weakness in technology stocks led the U.S. blue-chip indexes lower on Monday.

The coronavirus crisis continues to influence market sentiment. On Monday, the World Health Organization warned that the global pandemic isn't over yet despite high Covid vaccination rates in some countries. In Asia, places such as Singapore and Taiwan have seen a recent resurgence in local infections, prompting authorities to tighten restrictions in a bid to stem the virus's spread.

Earnings in focus

Earnings in Europe came from Engie, Homeserve, Imperial Brands and Vodafone on Tuesday.

Vodafone missed expectations to report a 1.2% drop in full-year adjusted earnings, sending the British telecoms company's shares tumbling 8.9%.

"The biggest issue in the numbers is that CapEx is going to be higher as a consequence of the 5G rollout," said Ben Barringer, equity research analyst at Quilter Cheviot.

"A high CapEx means you get lower free cash flow growth, and a low return on capital employed, which for Vodafone is very low at 3.9%, compared with double digits for a software company or high-quality compounder. There's not a great deal of value creation when it's that low."

Swiss hearing aid company Sonova climbed 11.5% to lead the Stoxx 600, after projecting strong full-year growth on the back of the market recovery and new product ranges.

French telecoms company Iliad plunged 10.2% to the bottom of the European blue chip index after missing first-quarter revenue expectations.

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