LONDON — European stocks traded higher on Tuesday as investors gauge developments ahead of the expiry deadline for the two-week ceasefire between the U.S. and Iran.

The pan-European Stoxx 600 gained 0.3%, with most sectors in positive territory, while the region's major bourses all advanced into the green just before 12:00 p.m. in London (7:00 a.m. E.T.).

Global markets are still assessing prospects for peace talks and the possibility of escalation.

The two-week ceasefire agreed between the U.S. and Iran was set to expire at 12:00 a.m. GMT (Tuesday, 08:00 p.m. ET), although U.S. President Donald Trump told Bloomberg on Monday that the truce would end "Wednesday evening Washington time."

Trump again threatened Iran with overwhelming military force on Monday, saying "lots of bombs [will] start going off" if no deal is reached before the shaky ceasefire expires.

The latest threat, made in a phone call with a PBS News reporter, came as the status of fresh U.S.-Iran peace talks have grown increasingly opaque.

Associated British Foods said Tuesday it was spinning off fashion retailer Primark from its food business. The food business, known as FoodCo, will retain the ABF name following the demerger, with George Weston named CEO. Eoin Tonge will be CEO of Primark.

Both companies will be listed on the London Stock Exchange.

ABF shares were 2.8% lower shortly after the company reported group revenues of £9.47 billion ($12.8 billion) for the half-year to February 28. Adjusted operating profits came in at £691 million, down 18% from £835 million for the same period last year, with revenues falling 2%, as Weston acknowledged a "challenging" first half.

Spain's Puig surged 5.9% following reports that Estée Lauder Companies had tapped J.P. Morgan for 5 billion euros to finance its acquisition bid for the Barcelona-headquartered fashion and beauty imprint.

Royal Unibrew plunged to the bottom of the Stoxx 600 index, falling 21.8% by midday after the Danish beer, soda and energy drinks maker said it was ending its partnership with PepsiCo in northern Europe.

Meanwhile, U.K. unemployment fell by 4.9% in the three-month period to the end of February, according to data published by the Office for National Statistics. The slide was a sharper fall than anticipated, with consensus estimates suggesting unemployment would hold steady at 5.2%. Wage growth, meanwhile, was up 3.6% on the year.

Overnight, Asia-Pacific markets were mixed, while U.S. stock futures inched higher early Tuesday after the Nasdaq Composite snapped a 13-day win streak during the regular session.

Earnings reports come from Rio Tinto, Thales, ASM International, Beiersdorf, Moncler and Vivendi.

— CNBC's Kevin Breuninger contributed to this market report.