Last checked at 
STOXX 600 up 1.3%
*
Fed pivot hopes brighten mood
*
U.S. stock index futures rise
Welcome to the home for real-time coverage of markets brought to you by Reuters reporters. You can share your thoughts with us at .
A RALLY WITH LITTLE FLOWS (1301 GMT)
Looking at the rally across equity markets in the run-up to this week's Federal Reserve meeting one would be tempted to say that there's a sense of optimism growing among investors.
But under the surface of an 8% rally for U.S stocks over the last two weeks, investor flows tell a somewhat different story.
"The strongest momentum support of this rally is found in S&P futures, elsewhere there is little to no positioning momentum behind the upturn," says Citi.
And even for the S&P, the bullish momentum "is not as strong as it seems". According to Citi, in fact, large S&P long and short positions are now offsetting each other and with all shorts becoming loss-making above 4,000, there could be a short squeeze supporting the market in the near term.
Nasdaq positioning instead is nearly a "one-sided net short". But if investors take profit on shorts on up-days, and add shorts on down-days, Citi says the risk of a short squeeze drops.
WHY WOULD ONE EVEN TOUCH UK SMALL CAPS? (1115 GMT)
London's Alternative Investment Market (AIM) is trading at levels last seen during the first COVID 19 lockdown in 2020 as rising costs of corporate debt and sterling volatility keep Britain's small companies under pressure.
Despite small gains in October after Rishi Sunak's appointment as Prime Minister and an u-turn move revoking the measures announced by his predecessor in September which crushed the UK markets, the index is still 34% down year-to-date.
This weak performance is tied to the gloomy outlook of the UK economy, yet Kingswood Holdings says the AIM market is a solid investment bet over the medium to long term. The wealth management group is listed on the AIM.
The AIM market "has housed solid cash-generative businesses that will continue to grow over the medium to long term. There has also been a rise in good quality and successful Family office businesses moving to AIM for Business Relief (BR), which allows small businesses to be passed down without incurring an inheritance tax (IHT) liability, presenting strong long-term growth and delivering good cash flows that savvy investors could own".
"WINDFALL OF WAR" (1111 GMT)
Joe Biden has threatened oil companies with tax penalties and other restrictions, calling their extra profits a "windfall of war" and has urged them to stop what he called "war profiteering".
The U.S. President is looking to lower prices at the pump with mid-term elections just a week away, but what does his threat mean for investors?
According to UBS, not much.
"While the Biden administration frequently calls for higher investment in U.S. production, shale producers have shown capital discipline amid demand uncertainty and tight labor conditions. Proposing a windfall tax on energy may grab headlines, but the required bipartisan consensus in Congress may be out of reach," the Swiss bank writes in its house view daily.
"We expect Brent crude to climb to $110 a barrel in the coming months on tight supply, and we maintain a preference for both energy equities and for oil within commodities," it adds.
Brent crude futures are currently around $94.
OCADO JUMPS 40%, BP EARNINGS, CHINA, FED LIFT MOOD (0820 GMT)
Ocado shares surged almost 40%, adding over 1.5 billion pounds in market value to the British online supermarket as it entered the South Korean market through a partnership deal with Lotte Shopping.
European shares also got support from blowout earnings from BP, and by a surge in basic resources stocks. Hopes that the U.S. Federal Reserve will signal that it could slow the pace of its rate hikes next month also lifted the mood.
The pan-European STOXX 600 index jumped 1%, after ending October at six-week highs. Leading the pack are the basic resource index, which is up 3% and oil & gas stocks, which are up 1%.
BP reported third-quarter profit of $8.15 billion, easily beating expectations, boosted by very strong natural gas trading as the company announced another $2.5 billion in share repurchases.
Commodities stocks also got a lift from China after an unverified note on social media suggested China may be planning to ease strict COVID curbs in March. The note triggered a sharp rebound following last month's savage selloff.
TRICK OR TREAT? (0713 GMT)
There's a sense of cheer among investors before the Fed's mid-week rate decision as markets seem to be pricing in an expected treat from the U.S. central bank.
Risk-on appetite is gradually coming back as global stocks flirt with their strongest levels in just over a month while the mighty dollar slips from a one-week high.
The Fed is set to raise rates by 75 basis points for the fourth straight time, bringing the target overnight lending rate to a 3.75%-4.00% range. But U.S. central bankers are likely to intensify a debate over when to downshift to smaller interest rate hikes to avoid sending the world's biggest economy into a tailspin.
Analysts at BlackRock Investment Institute are, however, still underweight on stocks as they see central banks on a path to overtighten policy.
And in Europe, there's little sign that inflation is peaking.
Consumer price growth in the 19 countries sharing the euro accelerated to 10.7% last month from 9.9% a month earlier, far outstripping expectations in a Reuters poll for 10.2%.
The broadening price pressures point to likely more interest rate increases from the European Central Bank after it raised rates by 75 basis points despite highlighting concerns about the economy.
"We think the ECB is still raising rates into a recession triggered by the energy shock and its hikes – and it will only stop once it sees the scale of economic damage caused," said the analysts from BlackRock Investment Institute.
On Tuesday, business surveys in Asia showed that the region's factory output weakened in October as global recession fears and China's zero-COVID policy hurt demand, adding to persistent supply disruptions and darkening recovery prospects.
Down Under, the Reserve Bank of Australia stuck with a 25 basis points rate hike as widely expected, while revising up its inflation outlook.
On the corporate front, BP is in focus as it reports results. On Monday, U.S. President Joe Biden called on oil and gas companies to stop 'war profiteering' and threatened a windfall tax on their record profits as he battles high pump prices with elections coming in a week.
Key developments that could influence markets on Tuesday:
Fed kicks off two-day meeting
U.S. Oct ISM
Europe earnings: BP, Rentokil
U.S. earnings: Pfizer, Prudential
EUROPEAN STOCKS SEEN HIGHER, INVESTORS AWAIT FOR FED, BOE (0645 GMT)
European futures are pointing to a start of the day in the black for bourses across the region as investors await for the Bank of England and the U.S. Federal Reserve meetings this week for any signs of easing in their aggressive monetary policy tightening cycles.
The Fed and the BoE are widely expected to raise their benchmark lending rate by 75 basis points this week in an effort to tame surging inflation. But investors remain hopeful the central banks will give signs they will start to slow their interest rates hiking paths in December or early next year.
On Monday, Eurostat data showed inflation in the 19 countries sharing the single currency accelerated to 10.7% in October from 9.9% a month earlier, beating expectations in a Reuters poll for 10.2% and way higher than the European Central Bank's 2% inflation target.
