Europe seen higher; Greek debt talks in focus

European equities are expected to open flat on Monday as investors watch Greece's attempts to negotiate a new debt deal with its European partners.

Greece's new left-wing government began what one market analyst called a "charm offensive" on Sunday to persuade its euro zone partners to create a new debt agreement with the country. The government has already started to reverse unpopular austerity measures that were a condition of its current bailout agreement, which could make negotiations harder.

Michael Hewson, chief markets analyst at CMC Markets, said that Greece's tour of Europe was designed to drum up support for Greece's position "in an attempt to exert pressure on Germany to be more accommodative with respect to a change of policy direction."

"Germany remains, for its part firmly opposed to any form of debt reduction, as do the Finns, and it is these two stances that are becoming increasingly difficult to reconcile given that Greece's debt is to all intents and purposes unsustainable," Hewson in a note Monday.

Greek Finance Minister Yanis Varoufakis is meeting his U.K. counterpart, Chancellor George Osborne, in London Monday.

Investors will also mull data released on Friday that showed the euro zone had fallen further into deflation. Consumer prices fell 0.6 percent year-on-year in January, worse than December's 0.2 percent fall. On a brighter note, however, unemployment in the single currency region fell to 11.4 percent in December.

Data from the U.S. on Friday also showed that the U.S. economy slowed sharply in the fourth quarter. U.S. gross domestic product grew at a 2.6 percent annualized rate in the fourth quarter, slipping from the third quarter's 5 percent growth rate.

On Monday, market sentiment could be hit by Asian data that showed that China's manufacturing activity was still in contractionary territory. China's final HSBC Purchasing Managers' Index (PMI) fell to 49.7, a touch below its 49.8 flash reading, and after dipping to 49.6 in December. The 50-point mark separates expansion from contraction.

Final January manufacturing PMI data are due from Italy, France, Germany and the euro zone on Monday. Spanish unemployment numbers are also due. Earnings are expected from Ryanair, Rosneft, Bankia and Julius Baer among others.