BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European stocks are seen opening on a sluggish note Tuesday as weak U.S. manufacturing data raised concerns about a slowing U.S. economy and mixed comments from Federal Reserve officials dampened hopes for a December rate cut.
U.S. Treasury Secretary Scott Bessent has admitted that parts of the American economy are already in recession, adding the slowdown could broaden if the Fed delays further interest rate cuts.
Most analysts believe tariffs will be inflationary for the economy and could drag it to 'quite close to recession'.
In her first policy speech since President Donald Trump tried to remove her from office, Federal Reserve Governor Lisa Cook said Monday that the rate decision in December would depend on how risks break down between stubborn inflation and a softening labor market.
Chicago Fed President Austan Goolsbee expressed caution about frontloading rate cuts, noting the rates need to decrease alongside inflation, which remains concerning.
San Francisco Federal Reserve President Mary Daly said she will analyze upcoming data before deciding on another reduction in December.
Fed speeches and JOLTs job openings data may shed more light on the state of the world's largest economy later in the day ahead of the release of payroll processor ADP's report on private sector employment on Wednesday and the University of Michigan's customer sentiment report, due out Friday.
Meanwhile, media reports suggest that key Republican and Democratic leaders in the Senate are discussing a potential resolution to end the prolonged government shutdown, which is into its sixth week.
The Supreme Court is set to hear arguments this week on the legality of President Trump's most sweeping tariffs.
On the earnings front, Palantir shares fell nearly 4 percent in extended trading despite the software firm beating Wall Street's estimates for the third quarter and giving strong guidance.
Asian markets were mostly lower as a tech rally fizzled out due to concerns over high valuations.
The dollar index held near three-month highs and gold dipped below $3,990 per ounce while oil prices edged lower after four days of gains.
Overnight, U.S. stocks ended mixed after a survey showed economic activity in the U.S. manufacturing sector contracted in October for the eighth consecutive month.
The tech-heavy Nasdaq Composite gained half a percent and the S&P 500 edged up by 0.2 percent on the heels of OpenAI's announcement of $38 billion deal with Amazon's AWS cloud computing arm, and news that Microsoft will ship the latest Nvidia chips to the United Arab Emirates for the first time. The narrower Dow fell half a percent on economic concerns.
European markets closed mostly higher on Monday, with automakers rising following reports that the White House would soon announce a resumption of Nexperia shipments from China.
The pan European Stoxx 600 ended flat with a positive bias, staying close to the record highs reached last week.
The German DAX surged 0.7 percent, while France's CAC 40 slid 0.1 percent and the U.K.'s FTSE 100 eased 0.2 percent.
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