European shares were lower on Tuesday in a broad selloff from the previous session's 29-month closing high, led by defence firm Thales after one of its joint contracts was scrapped.

Some strong individual results from corporate heavyweights including Xstrata, ArcelorMittal and UBS helped limit early losses, however.

The FTSEurofirst 300 index of leading European shares was trading down, after closing on Monday at 1,176.81 points, weighed by technicals after a good February run.

French telecoms firm Vivendi fell 2.7 percent the day after its SFR joint venture with Vodafone said it would absorb an increase in French value-added tax for existing customers. On the upside, Swedish lender Swedbank led gainers, up 3.7 percent, on its plans for share buybacks and a higher dividend payout, after reporting bumper quarterly results.

The world's largest steelmaker, ArcelorMittal, up 3.6 percent, hit a nine-month high on forecast-beating quarterly results and its expectation for a recovery in demand and prices in 2011.

Most Asian share markets struggled for traction, but Japan's Nikkei hit a fresh 9-month high and Australian stocks rose as hopes of a sustained recovery for the rich world encouraged investors to switch funds from emerging to developed markets.

Japan, the best-performing Asian market this year with a gain of around 4 percent, extended gains for a third straight day as investors pile into riskier assets in developed economies on hopes for a steady economic recovery. The benchmark Nikkei ended up 0.4 percent as did the Topix.

Toyota Motor's earnings released after the bell were better than analysts expected. It reported a 47.6 percent drop in quarterly profit, hit by slumping Japanese car sales and a firm yen, but lifted its annual operating profit forecast to 550 billion yen ($6.68 billion) from a cautious 380 billion yen, as profit for the first nine months topped the original figure.