By Christopher Whittall 

U.S. futures and European stocks edged higher Tuesday, as investors largely looked past the news of a deadly explosion in the U.K.

The blast at a concert hall in Manchester late Monday, which British police were treating as a terrorist attack, left at least 22 people dead. Such attacks in the Western world have had a limited impact on financial markets in recent times.

The British pound was roughly flat against the U.S. dollar recently and 0.2% lower against the euro, while some initial buying of havens such as government bonds soon eased in European morning trading.

"It's a tragedy," said Mike Bell, global market strategist at J.P. Morgan Asset Management, but it doesn't have "a read-through for markets."

Futures pointed to a 0.1% opening gain for the S&P 500 after the benchmark index ended higher for a third straight trading day on Monday on the back of gains for technology and industrial stocks.

The Stoxx Europe 600 was up 0.2% recently, led higher by gains in technology, banking and auto stocks, following a mixed session in Asia.

U.S. stocks have bounced back from a sharp decline midway through last week over concerns that political turmoil in Washington could derail President Donald Trump's agenda. Some analysts said a strong corporate earnings season and a robust underlying economy have lent support to equity markets in recent sessions.

"The reflation trade is evolving, but not ending. Yes, we have some political noise, but the company fundamentals remain pretty supportive," said Jean Medecin, a member of the investment committee at Carmignac.

"In this environment we believe we are in a 'buy the dip' market," he added.

In Europe, gains in technology stocks helped offset declines in mining and real-estate stocks, following strong gains for U.S. technology stocks on Monday.

Investors need to look beyond the large U.S. technology companies if they want to manage their risk while still generating returns, said Mr. Medecin, highlighting opportunities in smaller companies and those outside the U.S.

Further signs that the European economic recovery is gathering momentum also helped support local markets on Tuesday. Survey data showed that eurozone economic growth continued to run at its fastest rate in six years in May, according to estimates from IHS Markit.

Asian markets were mostly lower. The largest declines came in China, where investors have been concerned about the pace of initial public offerings--about 10 a week. The Shanghai Composite Index was down 0.5%, while the Shenzhen Composite Index fell 2.1%.

Japan's Nikkei Stock Average fell 0.3% and Australia's S&P/ASX 200 declined 0.2%. Korea's Kospi index bucked the trend to rise 0.3%.

In commodity markets, oil prices dipped after hitting their highest level in a month in the previous session. Brent, the global benchmark, was trading down 1% recently at $53.32 a barrel. Market participants are looking ahead to the meeting this week of the Organization of the Petroleum Exporting Countries, where the group is expected to extend and even deepen its production cuts.

In debt markets, Greek government bond yields moved higher on Tuesday after the country failed to reach a debt-relief deal with its creditors. Yields rise as prices fall.

The yield on the 10-year Treasury note declined from 2.254% on Monday to 2.248%, according to Tradeweb. Investors are looking ahead to the release of minutes of the Federal Reserve's May meeting on Wednesday.

Some investors are speculating the central bank could hold interest rates steady at its June meeting following the recent decline in the dollar and Treasury yields. But others say the Fed is on track to continue raising interest rates.

"We think they're going to go in June. There seems [to be] no reason for them not to--the economy seems strong," said Mr. Bell, who foresees bond yields rising in the coming months.

Investors will also be keeping an eye on forthcoming economic data releases, including new-home sales for April due later Tuesday, as well as durable goods orders and revised gross domestic product growth figures for the first quarter on Friday.

Ese Erheriene contributed to this article.

Write to Christopher Whittall at christopher.whittall@wsj.com

(END) Dow Jones Newswires

May 23, 2017 06:18 ET (10:18 GMT)