Europe open: Stocks start higher as traders look for direction

European stocks have begun the morning on the frontfoot, mimicking slights gains overnight in US trading amid much market commentary highlighting how equity volatility is at two-decade lows, which is sometimes a poor omen for shares.

As of 0813 BST the benchmark Stoxx 600 was higher by 0.26% to 395.06, alongside gains of 0.25% for the German Dax to 12,726.58 and a gain of 0.34% in the Paris Cac-40 to 5,400.51.

Euro/dollar was a shade lower at 1.0914, down by 0.08% versus the Monday close and just below its 200-day moving average, while Brent futures were gaining 0.72% to $49.70 a barrel on the ICE.

Wall Street's main stockmarket gauges closed slightly higher on Monday, but the fact that the CBoE's volatility index remained stubbornly near two-decade lows worried some traders, who believed investors had become too complacent. In parallel, others pointed to stocks at record highs alongside lower government bond yields as an incongruous combination which sooner or later would be resolved via losses for one asset class or the other.

Nonetheless, not everyone was overly concerned. In that respect, Mike van Dulken and Henry Croft at Accendo Markets said: "Note metals giving up more ground on a USD rebound and revived China concerns on the back of recently disappointing data. However, the VIX gauge of US market volatility also plumbed a two-decade suggesting low anxiety among investors who are merely awaiting the next catalyst to extend the long-term uptrend. More Trump policy progress?"

On a related note, on 4 May strategists at Bank of America-Merrill Lynch highlighted to clients the critical role central bank liquidity was playing in driving gains in financial markets.

German industrial production shrank by 0.4% month-on-month, better than forecasts calling for a drop of 0.7%, according to the country's Ministry of Finance, but downwards revisions to data for previous months meant the year-on-year rate of output fell to 1.9% (consensus: 2.5%).

Construction output added to February's month-on-month jump of 9.9%, rising by 1.3%.

Despite that, for the first quarter of 2017 as a whole total industrial production was 1.3% higher, following a rise of 0.4% at the tail-end of 2016.

Germany's trade surplus with the rest of the world hit €25.4bn in March, up from €20.0bn for February (consensus: €23.0bn)

Still on the economic calendar for Tuesday, Italian retail sales data for March were set for release at 0900 BST, followed by speeches from the presidents of the Federal Reserve banks of Boston and Dallas at 1800 BST and 2115 BST.

Ryanair and Lufthansa expressed an informal interest in Alitalia before a the sales process was due to kick-off, Il Messaggero said.

Analysts at Barclays stuck to an 'equalweight' rating on shares of Bank of Ireland while reiterating an 'overweight' for Danone with a higher target price of €70.7 for the latter.

Commerzbank posted a 28% jump in first quarter profits thanks to one-off income.

Net profit at Munich Re hit €557.0m over the first three months of 2017.