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Futures off session lows; Street eyes China, oil

U.S. stock index futures pared losses to point to flat to higher open as oil struggled for gains amid pressure from jittery Chinese markets.

Dow futures were off about 20 points after earlier falling more than 100 points.

Jeremy Klein, chief market strategist at FBN Securities, noted that European stocks, oil and some emerging market equities had come off session lows.

"Just coordinated buying all over the place," he said. "Futures are being dragged around."

U.S. crude attempted slight gains to trade around $36.80 a barrel, while Brent held a touch lower near $37.20 a barrel, as of 8:27 a.m., ET.

Overnight, Chinese stocks veered between gains and losses, following a sharp sell-off in the previous session after weak Chinese manufacturing surveys revived fears of a slowdown in the world's second-biggest economy.

On Tuesday, the Shanghai Composite eventually closed down 0.3 percent, while the smaller Shenzhen Composite ended 1.9 percent lower. The CSI300 closed up 0.3 percent on Tuesday, after a 7 percent dip on Monday resulted in trade being suspended. This was after China tested out its new system-wide circuit breakers, which are linked to the large-cap dominated index.

Monday was a rocky day for stock markets across the globe and the Dow Jones Industrial Average was no exception, closing down 1.6 percent. That marked the worst first trading day of the year since 2008.

Traders work on the floor of the New York Stock Exchange.
Getty Images
Traders work on the floor of the New York Stock Exchange.

The S&P 500 closed 1.5 percent lower on the day in its worst start to the year since 2001.

Earnings remain thin on the ground on Tuesday, with Sonic posting quarterly numbers and Eli Lilly giving 2016 guidance.

The day will also bring auto and truck sales data for December, out at 2 p.m. ET, plus the ISM-New York report on business.

In stock specific news, the U.S. Justice Department filed a civil lawsuit on Monday against Volkswagen for allegedly violating the Clean Air Act by installing illegal devices in vehicles to cheat emissions tests.

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Outside the U.S., Middle Eastern oil-producing nations are in focus after Saudi Arabia broke off diplomatic ties with Iran following an attack on its embassy. The White House has urged the two countries to show restraint, while Saudi Arabia has said that it will continue to push for peace in Syria and Yemen.