By Peter Nurse 

- European stock markets are expected to open largely unchanged Tuesday, as investors digest a key meeting between U.S. President Joe Biden and Chinese leader Xi Jinping as well as rising Covid-19 cases in the region.

At 2:05 AM ET (0705 GMT), the DAX futures contract in Germany traded 0.1% higher, CAC 40 futures in France dropped 0.1% and the FTSE 100 futures contract in the U.K. was largely unchanged.

The major equity indices in Europe received a largely positive handover from Asia, with the Hang Seng index in Hong Kong up over 1%, as the leaders of the U.S. and China met virtually in the closest communication between the two countries’ leaders since Biden took office in January.

There remain a number of points of tension between the world’s two largest economies, but public statements following the meeting prompted optimism that these can be smoothed out, benefiting riskier assets.

That said, any gains are likely to be limited in Europe Tuesday as the continent has again become the epicenter of the Covid pandemic. This is prompting some countries to consider following the lead of Austria and the Netherlands and reintroduce restrictions in the run-up to Christmas.

Additionally, tensions are mounting in Ukraine, with the U.S. warning that Russia is massing troops at the border and NATO stating it would be prepared to defend the sovereignty of the country.   

In corporate news, quarterly earnings come from the likes of Imperial Brands (OTC:IMBBY), Bouygues (PA:BOUY) and Vodafone (NASDAQ:VOD). On the data front, the U.K employment rate fell to 4.3% in September, from 4.5% the month before, while the October claimant count dropped almost 15,000, a sign that the end of the government's furlough scheme has not led to any dramatic deterioration in the labor market.

Later in the session sees the release of third-quarter employment and GDP readings for the Eurozone.

Crude prices rebounded Tuesday after recent losses, although gains are likely to be limited by fears of a hit to demand following a pickup in Covid-19 cases, particularly in Europe.

Fears of declining demand come as supplies are expected to rise. Last week, U.S. energy firms added oil and natural gas rigs for a third week in a row, focusing the attention on the release of U.S. crude oil data from the American Petroleum Institute later in the day.

By 2:05 AM ET, U.S. crude futures traded 1% higher at $80.51 a barrel, while the Brent contract rose 1.3% to $83.10. Both contracts dropped last week on the whole, for the third week in a row.

Additionally, gold futures edged higher to $1,866.65/oz, while EUR/USD traded 0.1% higher at 1.1377.