LONDON — European stocks closed higher on Tuesday, as traders shrugged off fears over the delta variant of Covid and rising inflation.

The pan-European Stoxx 600 provisionally ended up by 0.4%, with travel and leisure stocks adding 2% to lead gains as almost all sectors and major bourses entered positive territory.

The cautious optimism in Europe reflects similar sentiment in Asia-Pacific, where shares mostly rose in Tuesday trade while South Korean game developer Krafton plunged in its debut.

Worries about the impact of Covid on global growth have weighed on investor sentiment lately, with countries grappling with the spread of the highly transmissible delta variant of the virus.

On Wall Street, stocks were mostly higher, with the Dow Jones Industrial Average and S&P 500 notching fresh record highs.

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Meanwhile, two Federal Reserve officials indicated on Monday that the pace of the U.S. recovery and elevated inflation could prompt discussion about the central bank starting interest rate hikes.

Investors will be looking out for the latest U.S. consumer price index and producer price index data, both of which measure inflation and are scheduled to come out Wednesday and Thursday, respectively.

Back in Europe, Germany's ZEW survey of economic sentiment for August missed expectations by a significant margin on Tuesday, tumbling to 40.4 from 63.3 in July. Economists polled by Reuters had expected a reading of 56.7.

European companies reporting earnings on Tuesday included Hellofresh, Munich Re, ABRDN and InterContinental Hotels Group.

Hellofresh rallied 9% to lead the Stoxx 600 after a strong second-quarter earnings report.

Meanwhile, Deliveroo shares surged 6.9%, continuing to climb after announcing on Monday that Delivery Hero had taken a stake in the company.

At the bottom of the European blue-chip index, German used car broker Auto1 Group fell 3.1% despite reporting the strongest quarter in its history after the bell on Monday.

Shares of M&G sank 2.9% after the company swung to a loss after tax in the six months to June 30.

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- CNBC's Ryan Browne contributed to this report.

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