A look at the day ahead in European and global markets from Ankur Banerjee

Investors have long clamoured for China to unleash broad-based stimulus measures to help turn sentiment around, and while Tuesday's measures are well short of a 'big bazooka' move, it may still be a step in the right direction.

Chinese stocks surged and bonds rallied after China's central bank announced monetary stimulus, including its intention to cut the amount of cash that banks must hold as reserves - known as reserve requirement ratios - by 50 basis points.

Futures indicated European bourses were due for a slightly higher open, with focus on the stocks of luxury companies, which depend a fair bit on Chinese consumers for revenue.

Also included in the stimulus package are measures that will allow funds and brokers to access the central bank's funding in order to buy stocks.

While investors and analysts expect these sweeping moves to help lift the stock market in the near term, there remains room for more easing measures as well as fiscal policy push to help the stuttering economy.

China's stock markets have been the laggards in the region, with the blue-chip CSI300 index down 4% so far this year, having touched multi-year lows in the year as a dour economic outlook and stubbornly weak investor sentiment weighed.

On Tuesday the index was up 2.3%, while Hong Kong's Hang Seng index surged 3.2% to a four-month high.

Whether these moves are sustained will depend on investors being confident that a turnaround in sentiment is underway and the world's second-biggest economy will meet its growth target for the year.

The Australian dollar was slightly stronger after the Reserve Bank of Australia left rates unchanged as expected. The Aussie had touched a fresh 2024 high earlier in the session following the stimulus measures from China.

With the economic calendar in Europe bare, traders will likely look for cues on the path of U.S. rates in the wake of the 50 basis point rate cut last week from the Federal Reserve.

Markets are evenly split on a 50 bps or 25 bps rate cut in November with U.S. PCE data - the Fed's favoured gauge of inflation - due on Friday and the payrolls data scheduled for next week being the big needle movers.

Key developments that could influence markets on Tuesday:

Economic events: Germany IFO September business climate

(by Ankur Banerjee in Singapore; Editing by Muralikumar Anantharaman)