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

Ankur Banerjee:

Markets are holding their collective breath as optimism over

a possible deal to open the Strait of Hormuz clashes with the

growing fears of an impasse that could lead to escalation of

violence with yet another U.S.-imposed deadline looming.

The risk-off mood hasn't turned into a deep selloff yet as

traders bide time ahead of U.S. President Donald Trump's

deadline of Tuesday 8 p.m. Eastern Time (0000 GMT on Wednesday)

for a possible deal with Iran.

Both sides have traded barbs, attacks and insults as Iran

rejected a ceasefire proposal, instead looking for a lasting end

to a war that has shut the Strait of Hormuz, a key waterway of

energy supplies that has whacked markets and economies.

On the other hand, Trump warned Iran could be "taken out" if

it did not meet his deadline to reach a deal, threatening to

destroy Iranian power plants and bridges as he brushed off

concerns that such actions would be a war crime.

That left jittery investors mostly on the sidelines on

Tuesday with stocks struggling for direction while the dollar

held its ground. Even stellar earnings from chipmaker Samsung

Electronics ( SSNLF ) were not enough to lift the mood.

U.S. stock futures fell 0.44% while European futures

pointed to a subdued open as the region returns from

holidays on Friday and Monday. Brent crude stood at

$111.43 per barrel and is now up about $39, or 53% since the war

broke out.

The yen remained perilously close to the 160 per

dollar level that traders are worried could bring Tokyo into the

market to support the frail currency. But with demand for U.S.

dollar unrelenting, any intervention might end up being futile.

Manufacturing data later in the day might provide a glimpse

of the impact of the six-week long war on the European economy

and whether the worries over pricing pressure due to the energy

shock are warranted.

But for now investor focus will be on yet another binary

risk event that could shape near-term sentiment.

Key developments that could influence markets on Tuesday:

PMI data for March for France, Germany, euro zone and UK