Stock indices traded lower on the yuan devaluation. The yuan devaluated almost 2% against the U.S. dollar on Tuesday. The People's Bank of China set Tuesday's daily fixing at 6.2298 per U.S. dollar, down from 6.1162 on Monday.

A weaker yuan should help to boost the activity in the manufacturing sector and exports, which dropped 8.3% year-on-year in July.

The Greek government said on Tuesday that it reached a deal on the third bailout programme with its international lenders.

Meanwhile, the economic data from the Eurozone was mixed. Germany's ZEW economic sentiment index declined to 25.0 in August from 29.7 in July, missing expectations for a rise to 32.0.

"The German economic engine is still running smoothly. However, under the current geopolitical and global economic circumstances a substantial improvement of the economic situation in Germany over the medium term is improbable. That is why economic sentiment has declined," the ZEW President Clemens Fuest.

Eurozone's ZEW economic sentiment index increased to 47.6 in August from 42.7 in July.

Current figures:

Name Price Change Change %

FTSE 100 6,679.65 -56.57 -0.84 %

DAX 11,421.28 -183.50 -1.58 %

CAC 40 5,130.01 -65.40 -1.26 %