Europe's main stock markets ended the day higher on Tuesday after fresh US housing and consumer confidence data fed hopes of a recovery and US Federal Reserve chief Ben Bernanke was reappointed.

European stocks had a shaky start earlier in the trading day and fell, mirroring losses in Asia amid signs of jitters and profit-taking by traders.

But the picture changed after US President Barack Obama named Bernanke to a second four-year term and new data was issued showing that the fall in US home prices slowed in June and US consumer confidence rebounded in August.

London's benchmark FTSE 100 index closed up 0.42 percent, the Paris CAC 40 gained 0.78 percent and the Frankfurt Dax won 0.67 percent.

Elsewhere in Europe, Milan gained 0.53 percent, Brussels rose 0.82 percent, Madrid jumped up 1.10 percent and Amsterdam closed up 0.72 percent.

"The market appears to like the message of continuity at such a critical juncture in the nation's economic history," said Patrick O'Hare, an expert at Chicago-based market analysis company Briefing.com.

"The Fed chairman has ably demonstrated he is qualified to handle monetary policy during the worst financial crisis since the Great Depression," he added.

Ryan Sweet of Moody's Economy.com said that "by renominating Bernanke well before his term expires in January, Obama eliminates any uncertainty in financial markets about the leadership at the Fed".

On Wall Street, the Dow Jones Industrial Average was up 0.85 percent and the tech-heavy Nasdaq index gained 0.93 percent in afternoon trading.

Stocks were boosted after the US Conference Board reported its consumer confidence index rebounded to 54.1 points in August, well above analyst forecasts and snapping two months of declines.

Also lifting sentiment was the S&P/Case-Shiller housing price index, which showed price declines in 20 cities slowed to an annual decline of 15.4 percent in June from a 17.1 percent drop in May.

Lydia Wood, an economist at the Centre for Economics and Business Research in London, warned however that the two data releases, while positive news, "cannot pull the economy out of its trouble overnight.

"Consumer sentiment has shown to be very volatile in the past few months and is well below its pre-credit crunch levels. Meanwhile, the housing market appears to be on the way up, but it certainly has a deep hole to climb out of."

Among the market leaders on Tuesday were financial institutions, which tend to do better amid economic optimism, with Britain's RBS closing up 3.86 percent at 53.75 pence and Man Group shooting up 4.83 percent to 280 pence.

But mining companies lost out as commodity prices went down, with Rio Tinto giving up 1.33 percent to close at 2480.5 pence, BHP Billiton slumped 1.24 percent to 1628 pence and Antofagasta plunged 3.01 percent to 785.9 pence.

Asian shares had earlier fallen on profit-taking following strident gains on Monday. Tokyo fell 0.79 percent, Hong Kong shed 0.49 percent, Sydney was 0.46 percent lower and Shanghai slipped 2.59 percent.

Analysts cautioned that the recent bull run could face sharp corrections, as US stocks were now up about 17 percent over the past six weeks despite weak consumer confidence and rising unemployment.