European stocks are likely to edge higher on Tuesday as investors await a report on German economic sentiment, a leading indicator of economic health, and industrial output data from euro area for clues as to whether things are getting better or worse for the eurozone economy. The ZEW's economic sentiment index is likely to show that German economic confidence improved to 40 in May from 36.3 in April. At the same time, the current conditions index is seen rising to 9.8 from 9.2 in the prior month.
Euro area output is seen rising 0.5 percent in March, adding to the 0.4 percent increase in February.
Across the Atlantic, trading could be impacted by the release of a report on import and export prices, although activity may be somewhat subdued ahead of the release of a slew of key economic reports later in the week, including industrial production data on Wednesday and housing starts on Thursday.
Meanwhile, eurozone finance ministers have given the green light to disbursement of bailout tranches to Cyprus and Greece, but made little progress over the establishment of a proposed banking union as the split between euro area states on the establishment of the single supervisory mechanism became more evident. While France, Spain and Portugal called for fast and full implementation of banking union, Germany insisted that it needs a treaty change and will take some time.
The European Stability Mechanism, the euro area's permanent bailout fund, will provide a total of EUR 3 billion in its first-ever bailout payment to Cyprus. Of this, EUR 2 billion was disbursed on Monday. The ministers also approved EUR 7.5 billion aid disbursement to Greece, which will take place in two sub-tranches.
Asian stocks pared early gains as renewed concerns about a sluggish recovery in China offset investor optimism over the health of the U.S. economy. China's Shanghai Composite index is losing 1.3 percent, while benchmark indexes in Australia, Hong Kong, Indonesia, Malaysia, Japan and New Zealand are down less than half a percent each. South Korea's Kospi average is adding a percent, as automakers and technology companies gained ground amid a stronger yen.
In domestic corporate news, German drugmaker Merck KGaA reported higher profit for the first quarter and said that it wants to achieve its goals for 2014 one year earlier in 2013 itself.
Courier giant Deutsche Post DHL posted lower consolidated net profit for the first quarter, but said it still expects EBIT to increase to between 2.7 billion and 2.95 billion euros for 2013.
Solar energy firm Conergy AG said that it is issuing unsecured convertible bonds totaling EUR 4,575,610.20 to two strategic investors.
Fraport AG, the owner and operator of Germany's Frankfurt Airport, reported a 2.2 percent decline in passenger traffic at the Frankfurt Airport home base for April.
Airbus maker European Aeronautic Defence and Space Company EADS NV reaffirmed its guidance for the full year 2013 after reporting first-quarter net income of 241 million euros, up from 126 million euros in the year-ago period.
K+S Group reported an increase in its first-quarter adjusted profit before income taxes to 260.7 million euros from 232.6 million euros last year.
The European markets turned in a mixed performance on Monday, as investors digested weaker-than-expected Chinese industrial production data and remained wary ahead of a meeting of eurozone finance ministers in Brussels to discuss review programs for Spain and Cyprus. The German DAX and the U.K.'s FTSE 100 posted modest gains, while France's CAC 40 fell 0.2 percent and the SMI of Switzerland declined 0.4 percent.
U.S. stocks paused for breath after recent record gains overnight, with a report from the Commerce Department showing an unexpected increase in retail sales in April helping to limit the downside. The Dow slid 0.2 percent, but the tech-heavy Nasdaq and the S&P 500 edged up marginally.
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