This is CNBC's live blog covering European markets.

European stocks are heading for a flat to mixed open Wednesday as positive sentiment wavers in the region, spurred by market volatility in China.

Regional markets traded and closed lower Tuesday, with all major bourses and the majority of sectors trading in the red during the day. The lackluster session came after a shaky start to the week, with investors responding to a slowdown in China's stimulus rally.

Chinese stocks sold off in another volatile day of trading amid mixed Asia-Pacific markets overnight with the mainland CSI 300 dropping 6%, and Hong Kong's Hang Seng index extending its losses, falling 2.5%. On Tuesday, the HSI recorded its worst day in 16 years, closing 9.41% lower.

U.S. stock futures hovered near the flatline Tuesday night after a winning session for the major averages. Wall Street is coming off a strong session for the major averages Tuesday as tech stocks outperformed, and oil prices eased off their highs. 

Events to watch out for in Europe today include the German government's latest economic forecasts and the latest meeting of NATO defense ministers in Belgium.

— CNBC's Sarah Min and Lim Hui Jie contributed reporting to this market report.

Boston Fed's Collins sees more rate cuts ahead

Boston Federal Reserve President Susan Collins said Tuesday she expects more interest rate cuts ahead as inflation eases and the labor market cools.

"My confidence in the disinflation trajectory has increased – but so have the risks of the economy slowing beyond what is needed to restore price stability," Collins said in a speech to bankers in Boston. "Further adjustments of policy will likely be needed."

The central bank official noted that the Fed's "dot plot" after its September meeting pointed to an additional 50 basis points, or half percentage point, in reductions before the end of the year, though she did not specify whether she agrees with the consensus.

—Jeff Cox

Trade deficit fell more than expected in August

The U.S. trade deficit fell more than 10% in August as exports surged, imports declined and the shortfall with China shrunk.

The goods and services imbalance totaled $70.4 billion for the month, down 10.8% from the upwardly revised $78.9 deficit in July, the Commerce Department reported Tuesday. Economists surveyed by Dow Jones were looking for $70.8 billion.

That came as exports rose $5.3 billion, or 2%, and imports declined by $3.2 billion, or 0.9%. However, the year to date trade deficit is still 8.9% higher than the same period a year ago.

—Jeff Cox

Oil is selling off after surging on Middle East war fears

Crude oil futures were down nearly 3% in morning trading as fears of imminent retaliation by Israel against Iran have eased somewhat.

U.S. crude oil was down $2.25, or 2.92%, to $74.89 per barrel at around 9:17 a.m. ET. Global benchmark Brent had fallen $2.26, or 2.79%, to $78.67 per barrel.

Oil prices surged 13% through Monday's close since Iran launched about 180 ballistic missiles at Israel last week. Iran's attack had raised fears that Israel might retaliate by hitting the country's oil industry. President Joe Biden, however, has publicly discouraged Israel from taking this course.

The market was also disappointed that Chinese officials did not announce new stimulus at a press briefing Tuesday. Prior to the escalation in the Middle East, the oil market was swept by bearish sentiment on soft demand in China and worries that crude supplies will outpace global demand next year.

— Spencer Kimball

European markets: Here are the opening calls

European markets are expected to open in mixed territory Wednesday.

The U.K.'s FTSE 100 index is expected to open 6 points higher at 8,199, Germany's DAX up 7 points at 19,066, France's CAC unchanged at 7,521 and Italy's FTSE MIB down 61 points at 33,585, according to data from IG.

Data releases to watch out for in Europe today include the German government's latest economic forecasts. There are no major earnings releases.

— Holly Ellyatt