Expectations that U.S. politicians were closer to a deal to avoid a looming "fiscal cliff" of steep tax hikes and spending cuts that could hurt the U.S. economy enabled European shares to rise on Tuesday, tracking overnight gains on Wall Street.

The pan-European FTSEurofirst 300 index .FTEU3 was up by 0.4 percent at 1,137.30 points.

Hopes of a "fiscal cliff" deal grew on Monday night as President Barack Obama made a counter-offer to Republicans that included a major change in position on tax hikes for the wealthy, according to a source familiar with the talks.

The Bank of Japan was also set to ease monetary policy this week and consider adopting a 2 percent inflation target no later than in January, sources said, responding to pressure from next Prime Minister Shinzo Abe for stronger efforts to beat deflation.

* AIG (AIG.N)

American International Group Inc raised $6.45 billion from the sale of its remaining stake in AIA Group Ltd in Asia's second-largest block sale ever, exiting a business the U.S. insurer started nearly 100 years ago.

* APPLE (AAPL.O)/GOOGLE (GOOG.O)

A U.S. judge on Monday denied Apple Inc's request for a permanent injunction against Samsung Electronics' (005930.KS) smartphones, depriving the iPhone maker of key leverage in the mobile patent wars.

* WAL-MART

Wal-Mart Stores Inc's (WMT.N) Mexican affiliate routinely used bribes to open stores in desirable locations, according to a New York Times investigation published Monday, which cites 19 instances of the retail giant paying off local officials.

* KNIGHT CAPITAL (KCG.N)

Electronic trading firm Knight Capital Group is considering two competing acquisition offers following a board meeting on Monday that included presentations from suitors Getco Holding LLC and Virtu Financial LLC, sources familiar with the talks said.

* U.S. Q3 current account deficit figures are due to be released at 8:30 a.m. ET. Economists in a Reuters survey forecast a $103.4 billion deficit versus a deficit of $117.4 billion in Q2.

* Major U.S. companies reporting results include software group Oracle (ORCL.O) and investment bank Jefferies (JEF.N).

* The Dow Jones industrial average .DJI rose 100.38 points, or 0.76 percent, to 13,235.39. The Standard & Poor's 500 Index .SPX advanced by 16.78 points, or 1.19 percent, to 1,430.36, its highest close since October 22. The Nasdaq Composite Index .IXIC rose 39.27 points, or 1.32 percent, to 3,010.60.

(Reporting by Sudip Kar-Gupta/Chris Pizzey, London MPG Desk, +44 (0)207 542-4441)

• A Permanent Economic Emergency