European shares climbed on Tuesday, boosted by the real-estate sector, while investors also awaited the widely expected rate cut by the European Central Bank later in the week.

The pan-European STOXX 600 index rose 0.3 per cent after gaining nearly 1 per cent on Monday.

Rate-sensitive real estate sector advanced 1 per cent ahead of the ECB's interest rate decision on Thursday.

With markets fully pricing in a 25 basis-point cut this week, investors will keep a close eye on cues on likely rate cuts in October and December.

"I don't think the ECB would prefer to be too dovish at this point. There's no growth mandate for ECB, compared to the Fed that has a dual mandate," said Geoff Yu, senior macro strategist at BNY.

"Developments on the other side of the pond are still the main drivers of sentiment right now. The balance is probably a bit too lopsided in favour of the Fed."

Given the dominance of US data, traders were also focused on Wednesday's inflation report, which could provide clarity on the size of the Federal Reserve's rate cut when it meets next week.

The first debate between US presidential candidates Democrat Kamala Harris and Republican Donald Trump ahead of the Nov. 5 election is due later in the day.

"There will be direct observance of the event. This is not just the US story... it's much more for European story as well, given the tax burden that Europe faces," BNY's Yu said.

Germany's DAX ticked up 0.2 per cent after data showed the country's inflation slowed to 2 per cent in August.

Elsewhere, British labour data showed average weekly earnings, excluding bonuses, were 5.1 per cent higher than a year earlier in the three months to the end of July.

It's benchmark FTSE 100 was down 0.4 per cent.

The STOXX was also supported by gains in technology companies. Capgemini and SAP SE gained 7 per cent and 0.7 per cent, respectively, after Oracle's upbeat results.

Heavy-weight AstraZeneca shed 5.1 per cent, capping the STOXX's gains, after detailed study results showed its experimental lung cancer drug did not significantly improve patients' overall survival results.

The healthcare sector lost 0.8 per cent.

Hearing aid companies were the biggest percentage decliners after Apple said its new Airpods can work as hearing aids. Amplifon fell about 6 per cent, Sonova, Demant and GN Store Nord lost between 3 per cent and 4 per cent.