© Reuters.  © Reuters.

By Peter Nurse

Investing.com - European stock markets are seen opening mixed Tuesday, with investors showing caution ahead of upcoming central bank meetings despite signs of economic recovery in China.

At 2:25 AM ET (0625 GMT), the DAX futures contract in Germany traded 0.4% higher, CAC 40 futures in France dropped 0.1%, while the FTSE 100 futures contract in the U.K. fell 0.4%.

Data released earlier Tuesday showed continuous progress in China's economic recovery in August, with retail sales increasing 0.5% year-on-year and industrial production increasing 45.6% year-on-year. Both figures beat expectations, with retail sales, in particular, reporting their first increase in 2020.

“Domestic demand is driving China's economic growth. Retail sales returned to positive growth. And new-infra and traditional infrastructure investments increased, which matched the growth in these items in industrial production,” said analyst Iris Pang at ING, in a note.

That said, investors are looking to central banks for direction, with the U.S. Federal Reserve starting a two-day policy meeting on Tuesday, the first since unveiling a landmark shift to a more tolerant stance on inflation in August.

Markets will be focused on projections from Fed policymakers on the U.S. growth outlook and on any details about what the bank intends to do to encourage inflation.

The Bank of Japan and the Bank of England announce their respective policy decisions on Thursday.

In the U.K., Prime Minister Boris Johnson’s proposed legislation to rewrite part of the Brexit Withdrawal Agreement passed its first hurdle in Parliament late Monday.

Meanwhile, the U.K. employment market took a step backwards in August, with the unemployment rate edged higher to 4.1% from 3.9% in the three months to July, the Office for National Statistics said.

Oil prices edged lower Tuesday, weighed by worries about the outlook for global fuel demand ahead of a meeting later this week of the Organization of Petroleum Exporting Countries and its allies, known as OPEC+.

On Monday, OPEC downgraded its oil demand forecast for both this year and the next due to the ongoing coronavirus pandemic, while U.K.-based oil giant BP (NYSE:BP) said the era of oil-demand growth is over.

U.S. crude futures traded 0.1% lower at $37.24 a barrel, while the international benchmark Brent contract fell 0.2% to $39.55.

Elsewhere, gold futures rose 0.6% to $1,975.60/oz, while EUR/USD traded 0.2% higher at 1.1894.

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