European markets rose Tuesday after the previous day's selloff, but investors remained watchful about the debt crisis lingering over the euro zone.

Investors were worried after Moody's Investors Service Monday downgraded the long-term debt and deposit ratings of 28 Spanish banks. Moody's said the action reflects the Spanish government's declining ability to support the banks and their standalone credit profiles.

The German DAX 30 index rose 0.13 percent or 8 points to 6140.39. Shares of Daimler AG declined 1.34 percent and those of Volkswagen AG fell 1.68 percent.

The French CAC 40 index rose 0.35 percent or 10.56 points to 3032.20. Shares of Peugeot SA declined 1.19 percent and shares of GDF Suez rose 1.39 percent.

London's FTSE 100 index rose 0.17 percent or 9.48 points to 5460.13. Shares of Barclays PLC fell 2.11 percent and shares of Wolseley PLC declined 1.25 percent.

Spain's IBEX 35 rose 0.53 percent or 35.40 points to 6659.40. Shares of Iberdrola SA rose 1.18 percent and those of Ferrovial SA advanced 1 percent.

Investors are focusing on the European summit in Brussels Thursday and Friday, with markets clearly looking for the EU to lay out a clear road map for political, fiscal and banking union. Various issues ranging from debt mutualization to fiscal and banking union as well as a potential renegotiation of Greece's bailout terms will be discussed.

On the topic of banking union, policymakers are expected to consider centralized banking supervision and joint deposit guarantees to reduce uncertainty and the risk of bank runs. It is also expected to discuss whether to allow the euro zone's bailout funds to recapitalize banks directly.