Purchasing Managers Index figures begin a data and corporate results heavy week.

Recent manufacturing indicators have been positive, particularly in the United States, and investors are looking for signs of improvement outside the U.S. to keep the dollar's strength in check.

Consensus expectations, however, are for Europe's manufacturing PMI to stay firmly in contractionary territory at 46.6, which could add pressure on the euro.

Japan's factory activity contracted in April, though the pace of decline was very modest and at 49.9 the manufacturing PMI was its closest to the break-even point of 50 since slipping into contraction in June.

Japan's yen is trading precariously close to a three-decade low and is within a whisker of the 155 level that traders think may trigger intervention.

Japanese officials issued their strongest warning yet of possible yen buying. The Bank of Japan meets later in the week.

British PMIs are seen more or less steady. Sterling has turned shaky in the wake of Bank of England Deputy Governor Dave Ramsden sounding dovish in remarks last week, where he said he thought inflation was more likely to surprise on the downside.

Sterling hit a five-month low on Monday and gilt yields dropped as investors pencilled in a rate cut for August.

On the earnings front, it is a busy session ahead in New York with results due from Texas Instruments and Tesla and economic bellwethers including General Motors, General Electric, Pepsi and UPS.

China nudged its currency lower on Tuesday, fixing the yuan's trading band slightly weaker than the previous session. Chinese government bonds extended a long rally that's driven yields to record lows and put China's 10-year yields below U.S. yields by the largest margin in two decades.

Gold fell 1% and bond markets steadied as traders looked ahead to U.S. core PCE data due on Thursday.

Key developments that could influence markets on Tuesday:

Economics: European, British and U.S. PMIs

Earnings: Texas Instruments, Visa, Tesla, Pepsi, UPS, GM, GE, Lockheed, Halliburton

(Editing by Jacqueline Wong)