European Shares Seen Up As Middle East Worries Abate

European stocks are likely to open higher on Tuesday as U.S.-Iran tensions eased following the knee-jerk reaction toward the eruption of geopolitical tensions.

Investors also shifted their focus to the monthly U.S. jobs report due on Friday, which could offer some clues on the world's largest economy and the Federal Reserve's monetary policy path into 2020.

On the trade front, it is expected that the Chinese trade delegation will sign the first phase of its trade deal with the U.S. in Washington on Jan. 15.

Asian stocks rebounded and U.S. equity futures edged up as a day passed with no new aggression in the Middle East.

Investors turned cautiously optimistic about economic growth prospects in the year ahead after surveys of service sectors out overnight showed an improvement in the United States, U.K. and EU.

Oil surrendered hefty gains while gold fell from the highest level in more than six years.

In economic releases, flash inflation and retail sales figures from euro area are due later in the session, headlining a light day for the European economic news.

Across the Atlantic, reports on the U.S. trade deficit, service sector activity and factory orders may attract some attention, although traders are also likely to keep an eye out for news out of the Middle East.

Overnight, U.S. stocks recovered from an early slide to end higher as investors looked past escalating tensions in the Middle East and hoped that the conflict won't have lasting impact on the economy.

The Dow Jones Industrial Average inched up 0.2 percent, the tech-heavy Nasdaq Composite gained 0.6 percent and the S&P 500 added 0.4 percent.

European markets fell on Monday as Washington and Tehran continued to engage in an escalating war of words after the U.S. killing of top Iranian military commander Qasem Soleimani in an airstrike last week.

The pan European Stoxx 600 shed 0.4 percent. The German DAX declined 0.7 percent, France's CAC 40 index gave up half a percent and the U.K.'s FTSE 100 shed 0.6 percent.

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