A look at the day ahead from Tommy Wilkes.

As the rising COVID-19 caseload overshadows recent investor enthusiam and keeps buoyant share markets from reaching new highs, traders are hoping for positive news this week from a raft of corporate earnings.

Analysts at JPMorgan reckon the coming earnings season could brighten the mood, given the consensus in Europe is for a fall of 25% year-on-year -- a very low bar indeed. They note that projected earnings-per-share growth in Europe stands at the lows of the crisis, which they say seems too conservative.

European companies reporting on Tuesday include BHP Group, Lindt and Experian. Lindt reported a drop in 2020 sales but improvement in the second half of the year.

The U.S. season is in full swing meanwhile, with positive surprises anticipated from BofA, Morgan Stanley, Goldman Sachs and Netflix.

The mood on markets was broadly optimistic on Tuesday after widespread dumping of riskier assets on Monday.

European shares are heading higher after Asian shares rallied as investors bet China's economic strength -- underlined by data on Monday showing its economy was one of the few to have grown in 2020 -- would underpin regional growth.

Futures also point to a Wall Street rebound.

Still, investors remain cautious ahead of U.S. President-elect Joe Biden's inauguration. There are doubts too about how much of his $1.9 trillion fiscal stimulus package will pass Republican opposition in Congress.

The dollar, which had bounced off more than 2-1/2 year lows in the past week as more fearful investors bought back into the greenback, steadied.

Oil prices dipped while U.S. Treasury yields hovered below recent 10-month highs.

Key developments that should provide more direction to markets on Tuesday:

-Bank of England chief economist Andy Haldane speaks -German final inflation, car registrations for December -Germany ZEW economic sentiment survey -Janet Yellen hasa confirmation hearing for her U.S. Treasury secretary nomination -Italian Prime Minister Conte faces the Senate after winning the vote in the lower house of parliament. He needs this to stay in power. -Europe corporate earnings include BHP Group, Lindt, Experian -US corporate earnings include Halliburton, BofA, State Street, Goldman Sachs, Netflix

(Reporting by Tommy Wilkes)