China continued to set the pace for markets on Tuesday following the U.S. holiday inactivity the previous day, with Spain's Ibex-35 stock index opening in the red for the second consecutive day following disappointment over a smaller-than-expected interest rate cut by the Chinese central bank.

China cut benchmark lending rates by 10 basis points on Tuesday, the first cut in 10 months, although analysts said markets had been betting on a larger cut.

"The market still considers this timid monetary stimulus insufficient, which according to some forecasts should have been larger in the longer term in order to boost real estate activity," explained analysts at brokerage Renta 4.

At the European level, before the opening, German producer prices were published, which showed a monthly drop of 1.4% in May, when they also recorded their lowest annual increase in almost two years. However, inflation continues to remain at elevated levels, and the European Central Bank has indicated that further rate hikes are likely.

Macroeconomic data will be all the rage as the ECB looks for clues about future decisions.

"We continue to believe that European rate moves after the summer will be data-dependent, as there is no consensus within the ECB," added Renta4.

On Wednesday and Thursday, Federal Reserve Chairman Jerome Powell will appear before the US Congress, while on Thursday the Bank of England will make a decision on its interest rates.

In this context, at 07:15 GMT on Tuesday, the selective Spanish stock market index Ibex-35 fell 11.80 points, or 0.13%, to 9,420.10 points, while the FTSE Eurofirst 300 index of large European stocks fell 0.29%.

In the banking sector, Santander lost 0.36%, BBVA fell 0.71%, Caixabank gave up 0.08%, Sabadell gained 0.78%, Bankinter gained 0.14%.

Among the large non-financial stocks, Telefónica fell 0.33%, Inditex dropped 0.21%, Iberdrola gained 0.68%, Cellnex gained 0.11%, and the oil company Repsol rose 0.15%.

Sacyr fell by 3.13% the day after the deadline for trading shares with the right to participate in the company's capital increase.

Outside the Ibex-35, Applus shares rose 2.47%, after a possible takeover bid by the private equity fund I Squared Capital was announced on Monday.

Also outside the main stock market index, Atresmedia fell almost 8.2% after the last day of trading of shares with dividend rights.

(Information by José Muñoz; edited by Darío Fernández)