Europe close: Stocks jump on positive news from the States

Stocks recouped their losses from the previous day on the back of positive newsflow around the White House's tax reform efforts, alongside a dip in the single currency's value as investors bide their time ahead of the start of the US central bank's annual Jackson Hole symposium on Thursday.

At the closing bell, the benchmark Stoxx 600 was 0.83% or 3.08 points higher to 375.80, alongside a rise of 1.35% or 163.35 points to 12,229.34 for the German Dax and a 0.87% or 44.27 point advance in the Cac-40 to 5,131.66.

In tandem, euro/dollar was 0.42% lower at 1.1763, in part following the release of a weaker-than-expected reading on German economic confidence.

Nevertheless, geopolitics were not far from traders' minds.

"Stock markets in Europe have pushed higher today as traders decide to take on more risk. While the situation regarding North Korea hasn’t changed in either direction, investors are using the lull to pick up relatively cheap stocks. The stalemate between the two countries continues but there are no new developments, and this has brought about buying opportunities," said David Madden at CMC Markets UK.

On a more auspicious note, Politico reported progress had been made by top Republicans on thrashing out the broad contours of a viable reform of the US tax system with the aim of giving the economy a shot in the arm.

But not everyone was buying into the cheer, Ray Dalio, the billionaire founder of the world's largest hedge fund, Bridgewater Associates, said he was "tactically reducing" risk due to his concerns about the administration's ability to navigate internal and external conflicts.

"It seems to me that we are now economically and socially divided and burdened in ways that are broadly analogous to 1937. During such times conflicts (both internal and external) increase, populism emerges, democracies are threatened and wars can occur. I can't say how bad this time around will get. I'm watching how conflict is being handled as a guide, and I'm not encouraged," Dalio wrote in a post to his LinkedIn account.

Meanwhile, the ZEW institute reported that its economic confidence index for German slipped by 7.5 points in August to a reading of 10.0, falling short of market forecasts for a reading of 15.0.

Experts' outlook for the German economy soured in August amid a weaker than-expected export performance by the country and a widening scandal in the automobile sector, ZEW said in a statement.

Meanwhile, an index of consumer confidence in the Netherlands ticked higher in August, rising from 25 points to 26, according to the country's Central Bureau of Statistics.

In corporte news, Fabio Cerchiai, Atlantia's chief executive, defended his company's bid for Spain's Abertis, adding that the tollroad operator's shares would continue to be listed on the Madrid exchange if his company's buyout offer went forward.

Air Berlin boss Thomas Winkelmann expected to soon have positive news regarding his negotiations with investors, Handelsblatt reported.