European stock markets closed slightly higher in Tuesday trading, with the Stoxx 600 increasing 0.1%, Germany's DAX advancing 0.3%, the UK's FTSE 100 adding 0.2%, and France's CAC 0.1% higher.

Traders monitored the rise of tensions in the Middle East. US Central Command completed another series of attacks against Iran on Monday night, its third consecutive wave, aiming to "continue imposing a heavy cost on Iranian forces and degrade their ability to attack innocent civilians and commercial shipping in the Strait of Hormuz," the command said in a post on X. Meanwhile, President Donald Trump said the US is reinstating the blockade on Iranian vessels.

Brent Crude prices were rising 1% to $84.16.

In economic news, the UK's main problem is economic growth, Bank of England Governor Andrew Bailey testified to the Treasury Select Committee of the Parliament. The renewed Persian Gulf hostilities could exacerbate inflation and financial instabilities, Bailey said.

Separately, the UK government will tax electric vehicle owners for miles driven abroad under its planned pay-per-mile road charging system, arguing the approach is simpler and avoids the need to track drivers' locations, The Telegraph reported. The government said EV drivers will pay 3 pence per mile and plug-in hybrid owners 1.5 pence per mile from April 2028 to offset declining fuel duty revenues as petrol and diesel vehicles are phased out. Officials said overseas driving accounts for only about 2% of annual mileage by UK cars.

In corporate news, Uber is in advanced talks to buy Delivery Hero, with the ride-sharing giant aiming to reach an agreement as soon as this week, Bloomberg reported. A deal would likely value the German food-delivery company well above its recent trading price of about 36 euros ($41.23) per share, the report said. Delivery Hero shares jumped past 10% in Frankfurt.

Deutsche Bank said Tuesday it has partnered with the World Bank's Multilateral Investment Guarantee Agency, or MIGA, to establish a 1 billion euros ($1.14 billion) platform to boost trade finance in frontier and emerging markets. Under this framework, MIGA will provide Deutsche with guarantees to protect against the risk of non-payment in transactions by eligible state-owned banks, the bank said. Deutsche shares were up 1.8% in Frankfurt.

Shell will receive a production-linked tax credit from Nigeria for its Bonga Southwest Aparo deepwater project, Bloomberg reported. The report said Shell and its partners will receive a tax rebate of $11.50 per barrel of crude produced, more than double the standard amount, under terms approved by President Bola Tinubu. Shell shares added 0.8% in London.

ASML is expected to benefit from continued growth in extreme ultraviolet, or EUV, demand, with supply tightness likely to continue for the next two to three years, RBC Capital Markets said in a note. According to RBC, robust generative AI investment, tight DRAM supply and intensifying competition among leading-edge foundry customers are driving strong EUV demand. The company said that near-term upside is likely to remain modest because of long lead times. ASML shares rose 1.2% in Amsterdam.

Klarna is planning a significant risk transfer, or SRT, on about 6 billion Swedish kroner ($516.5 million) of loans originated by its Swedish unit to boost capital for its international expansion, Bloomberg reported. The transaction could be completed later this quarter, the reports said. Klarna is looking to launch banking products in other markets and has applied for a US bank license to expand its business in the country, according to the report.