European stocks are largely in the red on Tuesday afternoon, with the Stoxx 600 down 0.55%.

German industrial and defense firm Thyssenkrupp is among the worst performers, losing 5.4%.

It comes after Norway's biggest private pension fund, KLP, announced Monday it would exclude the firm — as well as U.S. truck manufacturer Oshkosh Corporation — from its portfolio over the companies' "sales of weapons to the Israeli military."

KLP said it had assessed the companies and "engaged in dialogue" with them following the publication of a UN report a year ago identifying the suppliers of weapons or equipment to the Israeli Defence Force (IDF) being used in Gaza.

"Our conclusion is that the companies Oshkosh and ThyssenKrupp are contravening our responsible investment guidelines," Kiran Aziz, head of responsible investments at KLP, said in a statement.

Until June 16, KLP owned shares worth around 10 million Norwegian kroner (roughly $1 million) in Thyssenkrupp, the pension fund said.

CNBC has contacted Thyssenkrupp and Oshkosh for comment.

Thyssenkrupp's share price has more than doubled in the year to date as investors bet on higher European defense spending in the region, particularly in Germany.

Thyssenkrup share price.

Yields on U.K. government bonds — known as gilts — moved lower across the board on Tuesday, ahead of a crucial parliamentary vote on welfare reforms that's expected to divide the governing Labour party.

Long-dated gilts saw the biggest moves, with the yield on the 30-year gilt dropping 10 basis points lower by 12:30 p.m. in London. Meanwhile, 20-year gilt yields fell by 9 basis points.

The yield on the benchmark 10-year gilt was last seen trading around 7 basis points lower at 4.42%.

Dozens of Labour politicians are expected to rebel against a government welfare bill when lawmakers vote on it this evening, according to the BBC.

The government has already U-turned on some of its original reforms — for example, a planned overhaul of the personal independence payment (PIP) paid to people with long-term health conditions will now only apply to new claimants.

The initial plans were announced in a bid to reduce government spending. Since the pandemic, monthly PIP payments have more than doubled, with around 1,000 new claims being made every day.

— Chloe Taylor

The average price of a home in the U.K. fell slightly in June, according to building society Nationwide's most recent House Price Index.

Nationwide on Tuesday said that average house prices hit £271,619 ($374,233) in June, marking a 0.8% drop from the previous month.

On an annual basis, the average house price was up by 2.1%, a marked slowdown from the annual growth of 3.5% seen in May.

"The softening in price growth may reflect weaker demand following the increase in stamp duty at the start of April," Nationwide's Chief Economist Robert Gardner said in a statement alongside the data release.

"Nevertheless, we still expect activity to pick up as the summer progresses, despite ongoing economic uncertainties in the global economy, since underlying conditions for potential homebuyers in the UK remain supportive."

— Chloe Taylor

Yields on European government bonds moved lower in the wake of the latest euro zone inflation print, which showed inflation hit the ECB's 2% target in June.

The yield on the German 10-year bund — seen as a benchmark for the euro zone — was 4 basis points lower by 10:25 a.m. in London.

Bond prices and yields move in opposite directions.

The yield on French 10-year bonds was over 4 basis points lower, while Italian 10-year bonds saw yields fall by 5 basis points.

— Chloe Taylor

The euro is rallying after data showed euro zone inflation hit the European Central Bank's 2% target in June.

The European currency was last seen trading around 0.3% higher, extending gains seen earlier this morning after the data was released.

Euro/US dollar price

Annual inflation in the euro zone edged higher to reach 2% in June, preliminary data from Eurostat has just shown.

The print was in line with economists' expectations, according to a Reuters poll.

That marked a slight rise from the previous month, when euro zone inflation came in at 1.9%.

Read more here.

— Chloe Taylor

Sainsbury's shares have pared earlier gains to trade 0.7% lower this morning, after the retailer reiterated its full-year forecast and said its fiscal first-quarter sales had risen by 4.7%.

The U.K.'s second-biggest food retailer said it expects to grow grocery volumes ahead of the market and deliver a retail underlying operating profit of around £1 billion ($1.4 billion).

— Jonathan Stayton

It's been around 25 minutes since the opening bell, and European shares are struggling to gain momentum.

The pan-European Stoxx 600 was last seen trading around 0.1% higher, but the index has been wavering between that gain and the flatline since the session began.

Stoxx 600 price today

Most sectors are trading in the green, with utilities stocks leading industry gains on a rise of around 1%.

Looking at major bourses, only the FTSE 100 — last seen up by 0.2% — is trading in positive territory.

— Chloe Taylor

Risks to inflation and growth in the euro area are now tilted to the downside, Belgian central bank chief Pierre Wunsch told CNBC's Annette Weisbach at the European Central Bank's annual forum in Sintra.

"There is a broad consensus that we are very close to [the ECB's 2% inflation] target now, the job is mostly done," Wunsch said.

"We've had two years of relatively slow growth in Europe, we're waiting for this recovery but of course with the uncertainty it might be again delayed a little bit, although the economy is resilient."

"So if anything, if we have to move more it probably will be to the downside, a further cut. I'm not pleading for one but I think if there is any discussion it's more in that direction."

The ECB will be monitoring economic data in the coming months to see if euro zone growth, particularly in production, improves — and may need to be "a bit more supportive" if it doesn't, he said.

The central bank cut interest rates to 2% in June, after inflation in the 20-nation bloc eased to 1.9%.

— Jenni Reid

Welcome to CNBC's live blog covering all the action in European financial markets on Tuesday, as well as the latest regional and global business news, data and earnings.

Futures data from IG suggests a generally positive start for European markets, with London's FTSE looking set to open unchanged at 8,774, Germany's DAX up 0.2% at 23,955, France's CAC 40 up a notch at 7,679 and Italy's FTSE MIB up slightly at 39,865.

The generally positive start for Europe comes as global investors begin to assess the trade talks and the tariff landscape as U.S. President Donald Trump's 90-day reprieve from higher import duties is set to expire next week.

Asia-Pacific markets traded mixed overnight as investors assessed the record gains on Wall Street and the prospects for trade deals, while U.S. equity futures were little changed early Tuesday after the S&P 500 notched another record to close out a stunning quarter.

U.S. Treasury Secretary Scott Bessent said Monday that there are "countries that are negotiating in good faith." However, he added that tariffs could still "spring back" to the levels announced on April 2 "if we can't get across the line because they are being recalcitrant."

Canada walked back its digital services tax in an attempt to facilitate trade negotiations with the United States. Ottawa's move to rescind the new levy comes after President Donald Trump said on Friday that he would be "terminating ALL discussions on Trade with Canada."

— Holly Ellyatt

The big data release in Europe on Tuesday is the latest preliminary inflation data from the euro zone. Analysts expect the rate to have hit 2% in the year to June, which would be in line with the European Central Bank's target.

Earnings are set to come from Sodexo and Sainsbury's. Other data releases include German unemployment figures and U.K. Nationwide house prices data.

CNBC continues coverage of the ECB's forum in Sintra, Portugal, where central bankers have gathered this week.

— Holly Ellyatt