European stocks recover as German political tensions ease

European stock markets recovered on Tuesday as political worries eased in Germany but shares in Swiss mining operation Glencore saw a meltdown on news of a US legal probe over its global activities.

Meanwhile, US stocks finished a holiday-shortened session lower with Wall Street equities fluctuating with oil prices.

Europe's benchmark indices were up by between half a percent and 1% at the close.

"European markets are in rebound mode... as an apparent resolution to the German political impasse has helped dispel much of the trade war anxiety that was evident throughout Asia," noted Joshua Mahony, market analyst at IG trading group.

In high-stakes crisis talks overnight, German Chancellor Angela Merkel had put to rest a dangerous row with her hardline Interior Minister Horst Seehofer that had threatened the survival of her fragile coalition government.

"News that Merkel is safe, and the fragile German coalition will live to see another day has encouraged traders back into the Dax, which had been suffering at the hands of investor anxiety about new snap elections," said London Capital analyst Jasper Lawler.

But the deal, which essentially amounted to an about-turn in Merkel's liberal refugee policy, immediately sparked resistance from Germany's neighbours as well as the third member of her shaky coalition, the Social Democratic Party.

London slightly underperformed as gains in the top UK index were stemmed by a plunge in the value of Glencore, which was down a hefty 7.8% in late trading, having earlier fallen even further after saying it was being probed by US authorities in a corruption investigation over its activities in Nigeria, Venezuela and DR Congo.

US stocks finished decisively lower in a shortened session ahead of the July 4th holiday on Wednesday. Of the major indices, the tech-rich Nasdaq fell the most, losing 0.9%.

Facebook tumbled 2.4% after confirming it faces investigations by the Securities and Exchange Commission and the Federal Bureau of Investigation on its release of consumer data to now-defunct political consultancy Cambridge Analytica.

Tesla Motors was another weak tech stock, dropping 7.2% a day after the company reported meeting a key production target for its Model 3 sedan.

Other large technology companies, including Apple, Google-parent Alphabet and Microsoft, also fell.

Analysts said market sentiment on Wall Street shifted when oil prices retreated after US oil prices briefly breached $75 a barrel for the first time in more than three years. The benchmark American contract finished up 20 cents at $74.14 a barrel.

Earlier, Asian stock markets ended mixed, with investors awaiting US-China tariff announcements in the latest trade war developments.