By Sara Sjolin, MarketWatch

LONDON (MarketWatch) -- European stock markets rallied to a more than three-month high on Tuesday after a round of better-than-expected data from China and as tensions eased in the Syria conflict.

The Stoxx Europe 600 index gained 1.3% to 309.80, closing at the highest level since May 22. On that date, the index ended at an almost five-year high after a period of aggressive monetary policy from central banks, but markets started moving lower in the following weeks on concerns the U.S. Federal Reserve soon would scale back its easing program.

"The Chinese news has been the most positive for the market today. The data came after solid survey data from last week and prove that China is in a slightly better position that what we thought a month or two ago," said Victoria Clarke, economist at Investec Securities in a note.

"Considering the signals given that we're potentially on the edge of Fed tapering, it's reassuring to see that China's economy is robust and in a resilient position. If the those Chinese numbers continue to grow they could fill the gap from the impact of U.S. tapering," she added.

Among notable movers in the pan-European index, shares of Neste Oil Oyj rallied 13% after the refining firm upgraded its 2013 full-year outlook and said it expects "comparable operating profit to improve significantly compared to 2012."

Ashmore Group PLC put on 5.3% after the asset manager said assets under management jumped 22% in the year to June 30.

China data and Syria

For the broader European stock markets, investors cheered the latest data from China. Industrial production in the country rose 10.4% in August, up from 9.7% in July and beating expectations of a 9.9% gain. Additionally, retail sales jumped 13.4%, also topping analyst expectations. Asia stocks closed in positive territory.

Markets were also buoyed by developments in the Syria conflict, where tensions eased Monday night. U.S. Secretary of State John Kerry suggested in off-the-cuff comments that Syrian President Bashar al-Assad could avert a military attack by handing over his chemical weapons to the international community. Russia declared its support and Interfax news agency said on Tuesday that the Syrian government had accepted the Russian proposal to give up the weapons in order to "remove the grounds for American aggression," according to Reuters.

The call comes as U.S. President Barack Obama has tried to build support in Congress and internationally to launch an intervention in Syria, after government forces there allegedly used chemical weapons against civilians. Obama said late Monday he would put airstrikes on hold if Syria were to give up the weapons on condition the U.S. verified the handover

U.S. stocks traded higher on Wall Street and gold and oil extended losses.

Europe movers

Germany's DAX 30 index jumped 2.1% to 8,446.54.

Shares of Volkswagen AG were up 4.1% in Frankfurt after the auto maker said car sales rose in the January-to-August period. The company also introduced its first purely electric car.

France's CAC 40 index gained 1.9% to 4,116.64 and the U.K.'s FTSE 100 index put on 0.8% to 6,583.99.

In London, mining firms posted some of the biggest gains, supported by the Chinese data. Shares of Rio Tinto PLC (RIO) rose 2.8% and BHP Billiton PLC (BHP) picked up 1.7%.

Shares of Glencore Xstrata PLC (GLCNF) put on 2.3% after the newly merged company said it has identified at least $2 billion of synergies for 2014, exceeding the initial merger guidance of $500 million.

On a more downbeat note in Europe, shares of Partners Group Holding AG slumped 8.7% after the asset manager reported a slide in first-half revenue margin.

GlaxoSmithKline PLC (GSK) shares lost 2.5% after Citigroup cut the drug maker to neutral from buy after a period of outperformance. Instead, the analysts said they favor buy-rated Novartis AG and Roche Holding AG in Europe and buy-rated Bristol-Myers Squibb Co. (BMY) and Pfizer Inc. (PFE) among the U.S. majors.

Novartis shares rose 1.2% in Zurich and Roche added 0.9%.

Stocks were also higher in Italy, although political uncertainty dented the gains. The FTSE MIB index closed 0.5% higher at 17,332.42.

A senate committee on Monday began discussions on whether to expel former Prime Minister Silvio Berlusconi from the parliament in the wake of his tax-fraud conviction and a vote could take place later this week. A decision to eject Berlusconi from the parliament could not only mark an end to his political career, but also threaten to bring down Italy's governing coalition.

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