The German market is in positive territory on Tuesday, after the U.S. markets ended notably higher overnight. Sentiment was also influenced by the meeting of European leaders on May 23, which may come up with new measures to address the region's debt crisis.
Meanwhile, the Organization for Economic Co-operation and Development warned in its latest economic outlook report that the global economic recovery is fragile and could be derailed by the ongoing Eurozone debt crisis.
The Paris-based think-tank downgraded the outlook for the euro area economy. It now sees a 0.1 percent contraction in economic activity in 2012, compared to 0.2 percent growth projected in the November report.
Meanwhile, Spain's borrowing costs continued to climb higher in the latest debt auction as markets remain concerned over the economic prospects of the country.
The Euro Stoxx 50 index of eurozone bluechip stocks is adding 0.84 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, is gaining 0.80 percent.
The DAX index opened higher and is currently adding 0.61 percent.
HeidelbergCement is gaining 2.1 percent. Daimler, BMW and Volkswagen are advancing between 1.9 percent and 1.5 percent.
SHW is climbing 2.9 percent. Berenberg initiated the auto dealer with a "Buy" rating.
Deutsche Bank is down 1 percent and Commerzbank is losing 0.5 percent.
Metro is declining 3.1 percent. Drugmaker Merck is falling 1.8 percent and Fresenius is losing 1.5 percent.
Nexavar, a drug co-developed by Bayer HealthCare Pharmaceuticals Inc. and U.S. drugmaker Onyx Pharmaceuticals, Inc., has failed to meet its primary endpoint in a late-stage study evaluating its potential in patients with advanced relapsed or refractory non-squamous non-small cell lung cancer. Bayer shares are falling 0.9 percent.
Elsewhere in Europe, the French CAC 40 is adding 0.62 percent and the UK's FTSE 100 is rising 0.82 percent. Switzerland's SMI is advancing 0.65 percent.
In economic news, U.K. annual inflation slowed more than expected in April and reached the lowest since February 2010, data from the Office for National Statistics showed. Consumer price inflation fell to 3 percent from 3.5 percent in March, slightly below the expected rate of 3.1 percent.
U.K. policymakers can consider further monetary easing as anemic nominal wage growth and broadly stable inflation expectations suggest weak underlying inflationary pressure, the International Monetary Fund said on Tuesday.
"Monetary stimulus can be provided via further quantitative easing (QE) and possibly cutting the policy rate," the lender said in its Article IV Consultation Concluding Statement.
Across to Asia, Fitch Ratings trimmed Japan's credit ratings, citing growing risks to credit profile as a result of high and increasing public debt ratios. The long-term foreign and local currency Issuer Default Ratings were lowered to 'A+' from 'AA' and 'AA-', respectively. The outlooks on both ratings are Negative.
The Conference Board's leading indicator for China's economic activity increased at a steady pace in April, suggesting a modest growth ahead. However, the underlying indicators showed some degree of weakness, sending a mixed message over the prospects of the economy.
Among major markets in Asia/Pacific, Australia's All Ordinaries gained 1.2 percent and Hong Kong's Hang Seng rose 0.6 percent. China's Shanghai Composite Index and Japan's Nikkei 225 added 1.1 percent each.
In the U.S., futures point to a lower open on Wall Street. In the previous session, the Dow rose 1.1 percent, the Nasdaq jumped 2.5 percent and the S&P 500 climbed 1.6 percent.
In the commodity space, crude is falling $0.44 to $92.13 per barrel and gold is losing $10.9 to $1577.8 a troy ounce.
For comments and feedback: editorial@rttnews.com