LONDON -- European stocks are expected to open marginally higher Tuesday, benefiting from a positive close on Wall Street Monday, but gains are likely to be limited amid continuing doubts about the extent of the global recovery.
"There's concern building as to the possibility of a recovery across the Atlantic, where creeping interest rates are weighing on the economic outlook," said Matt Buckland, a dealer at CMC Markets.
U.K. government house-price data and U.S. wholesale inventories will be closely watched. "With limited directional data around, how the U.S. performs later today could be instrumental in determining where the European markets close," said Mr. Buckland.
In the U.S. Monday, investors' faith that a recovery is on the way in the U.S. economy waxed and waned, leaving major indexes little changed at the closing bell. The Dow Jones Industrial Average was off 130 points at its intraday low but finished with a 1.36-point gain at 8764.49. The S&P 500 finished off 0.1%.
Asian shares were lower Tuesday, with some markets erasing early gains as investors turned cautious on the near-term outlook. Japan's Nikkei 225 closed down 0.8%, while South Korea's Kospi Composite was off 0.9% and Hong Kong's Hang Seng Index fell 1.5%.
"It seems the market no longer wants to hear 'it's not getting any worse' anymore," said Phillip Securities economist Joshua Tan in Singapore. "We have a sneaking feeling it's going to want the economy to 'show me the money' from now on. It could really be wanting clear evidence for the right side of the V-shape recovery before charging ahead any higher."
In currency markets, the dollar strengthened overnight after Standard & Poor's downgrading Ireland's sovereign credit rating for the second time in three months. The euro fell from a high of $1.3975 in Europe trading to a low of $1.3820 in New York Monday, while the dollar traded in a ¥98.25 to ¥98.73 range. In recent trading, the euro stood at $1.3877, while the dollar was at ¥98.04.
Crude oil futures pushed higher early Tuesday, rebounding after a bout of profit taking on the back of the strengthening dollar. The July crude contract on Globex stood at $68.86 per barrel, up 77 cents.
Spot gold, which has also felt pressure from the strengthening dollar, was trading at $951.00 a troy ounce, over $10 below the levels seen in New York late Monday.
European government bond markets opened slightly weaker, reflecting the weaker tone on U.S. Treasurys on a growing view that policy makers could tighten interest rates sooner than expected. The September bund contract stood at 118.09, 0.11 lower.
