European stocks slumped Monday, led by a pullback in oil shares, as investors entered the trading week with the dollar sitting at a seven-month high while they waited to hear what's next for monetary policy at the European Central Bank.

U.S. stocks finished lower Monday as warnings about accelerating inflation coupled with crude-oil trading below $50 a barrel overshadowed strong earnings from Bank of America Corp. In an interview with CNBC, Jeffrey Gundlach reiterated his short positions on stocks and bonds and predicted that policy makers will have to resort to fiscal policies to support the economy.

Asian stocks crept up on Tuesday thanks to a rebound in oil prices and the dollar consolidated recent gains although underlying risk appetite was cautious on concerns over capital outflows and weak data, especially from China. Special focus will be on China's B Share market .SSEB, which was trading up around 0.8 percent on Tuesday after tumbling more than 6 percent on Monday on concerns of extended yuan weakness.