European stock markets are anticipated to begin higher on Tuesday, with signs of renewed confidence in the banking industry emerging ahead of Fed meeting.

European stock markets are anticipated to begin higher on Tuesday, with signs of renewed confidence in the banking industry emerging ahead of the commencement of the current Federal Reserve policy-making meeting.

Investors have taken encouragement from Credit Suisse's rescue by Swiss competitor UBS, with UBS's shares finishing higher on Monday after severe early losses were reversed by the end of the day.

Concerns linger about the likelihood of shockwaves on smaller US banks, as well as potential turmoil in the bond markets as a result of Credit Suisse's junior bondholders' losses.

The focus is now on the Federal Reserve's meeting this week, which begins later this session and lasts two days. The crisis in the banking industry has raised questions about whether the Federal Reserve would continue to raise interest rates to combat rising inflation.

On Monday, European Central Bank President Christine Lagarde hinted that the current financial market turmoil may force the central bank to halt raising interest rates sooner than originally anticipated.

Last week, the ECB raised its benchmark interest rate by 50 basis points to 3%, and Lagarde reiterated that the inflation forecast alone would justify more rate rises.

The key economic announcement scheduled for Tuesday is Germany's ZEW survey of economic confidence for March, which is predicted to fall to 17.1 from 28.1.

RWE will be in the limelight in business news as Germany's largest utility revealed intentions to boost its dividend even as it anticipates operational profit to dip in 2023, citing reduced margins at its gas-fired power plants. In addition, Kingfisher Plc will announce earnings, as will Nike but after the US market closes.

Oil prices dipped on Tuesday as investor confidence remained shaky following a week of volatility in the banking sector and ahead of this week's Federal Reserve interest rate decision.

Later in the afternoon, the American Petroleum Institute will announce its estimate of US crude inventories. They increased by little more over 1 million barrels last week, continuing their rise after a one-week dip.

(Investing.com, Reuters.com)