European shares hit a 2-1/2 month high and the dollar was on course for its first three-day rise since June on Tuesday before data expected to paint an improving economic picture on both sides of the Atlantic.
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A sentiment survey from Germany is seen bolstering recent signs of momentum in Europe's powerhouse economy while the fastest rise in British house prices in seven years signalled the pick-up going on there too.
London's FTSE, Germany's DAX and Paris's CAC 40 opened respectively 0.6 percent, 0.9 percent and 0.4 percent higher to push the broad FTSEurofirst 300 stock index to its highest level since mid-May, adding to a renewed sense of optimism in the region.
Debt markets also reflected that shift. Yields of safe-haven German 10-year government bonds hit their highest in a month while risk premiums on Italian and Spanish bonds continued to ease.
"Bunds started very weak today because of ... expectations that the ZEW index will come in very strong. We also believe it could top the consensus forecast," said Ralf Umlauf, head of floor research at Helaba Landesbank Hessen-Thueringen.
The August ZEW is forecast at 40.0, up from 36.3 previously, while euro zone industrial output is expected to have risen 0.8 percent in June. The numbers are due at 0900 GMT.
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GDP data due on Wednesday is expected to show the region's economy grew 0.2 percent in the second quarter, marking the end of its longest recession on record, according to a Reuters poll.
JAPAN TAX PLANS
U.S. retail sales data due later on Tuesday was also in sharp focus, with investors still trying to gauge when the U.S. Federal Reserve will begin winding down its stimulus programme. Wall Street was expect to open around 0.2 percent higher.
In Asia, Japanese shares jumped 2.6 percent and the yen fell after a media report that Prime Minister Shinzo Abe is considering a cut in corporate tax to counter the pain of a planned sales tax increase.
For the Nikkei it was a partial rebo0nd after the index fell to its lowest since end-June on Monday on slower-than-expected economic growth data, while the yen's 0.6 percent dip to 97.475 yen to the dollar took it away from last week's seven-week high.
Against a basket of major currencies, the dollar was up 0.2 percent, extending gains into a third day in anticipation that U.S. data will point to the Fed rolling back its $85 billion of monthly bond purchase sooner rather than later. The next test of this view will be Tuesday's retail sales, which most expect to be strong.
"Better economic data from China last week has left Asia ex-Japan with a positive tone. Now it will be the turn of the U.S. to show what it can do with some retail therapy," Societe Generale wrote in a note.
Asian shares measured by MSCI Asia-Pacific ex-Japan index rose 1.0 percent to a two-week high, extending Monday's gain on the back of last week's Chinese factory output data.
In the commodities markets, gold eased 0.1 percent after surging as much as 2.2 percent to a three-week high on Monday. The precious metal is down 20 percent this year following a sharp sell-off as investors have eyed a downward shift in central bank stimulus.
There were signs of strength elsewhere. Copper climbed back towards the previous day's 2-month high of $7,318 a tonne and tensions in Libya pushed Brent oil past $109 a barrel to leave it just shy of last week's $110 four-month high.
"Since the Fed has cooled talk of ...(winding down stimulus) this has in general supported commodities, and the economic data has been a bit better," said Rabobank commodities strategist Georgette Boele.