* European shares struggle for direction

* U.S. futures indicate flat

* German ZEW, U.S. retail sales in focus

* Citigroup interest margin decline highlights headwinds for banks

By Karin Strohecker

LONDON, July 16 (Reuters) – Global stocks struggled to cling to recent gains on Tuesday and the dollar lingered with markets awaiting U.S. data and a slew of corporate and bank earnings for a fresh readout on the health of the world’s largest economy.

European markets struggled for direction with the pan-region Stoxx 600 nudging a touch lower, reflecting key indexes in Germany and France treading water.

The underlying picture was more mixed, with healthy gains in airline and healthcare stocks offsetting losses in telecoms and automotives amid uncertainty as the earnings seasons kicks off.

Asian markets had fared slightly better. MSCI’s Asia-Pacific ex-Japan index gained 0.3% as gains in South Korea and Taiwan offset losses in China’s blue-chip CSI300 index, still smarting from Monday’s tepid growth data. It showed the toll the Sino-U.S. trade war is taking, even as new data highlighted Beijing’s efforts to boost spending.

But much of the focus was already shifting to the United States, where futures pointed to a flat opening. The U.S. earnings season is kicking off with heavyweights JPMorgan, Goldman Sachs and Wells Fargo all due to report.

Markets also await retail sales data – expected to show a 0.1% rise in June. This comes ahead of major central bank decisions, with the ECB due on July 25 while the U.S. Federal Reserve is expected to deliver a rate cut shortly thereafter.

The market is waiting for what the ECB will do, followed by what the Fed will do and in the meantime there is still this undercurrent of waiting for some of the earnings season results to come out,” said Gerry Fowler, investment director at Aberdeen Standard Investments.

The 2019 earnings season will be roughly zero growth … unless we see broader economic growth recovery, we may not see material earnings growth again for quite some time.”

Citigroup’s results on Monday had provided markets with a first taster: a decline in net interest margin in its mixed quarterly report underlined risks for financial firms in a lower interest rate environment. That decline partly overshadowed better-than-expected profit numbers, triggering a fall in shares of other banks on concerns that it would presage lower profits across the industry.

The fallout from trade tensions has also cast a cloud over the upcoming earnings season. Overnight, U.S. President Donald Trump showed no signs of softening his stance on China, warning that Washington could pile on more pressure as trade talks sputtered along.

Though this has also reinforced expectations of policy easing by major central banks. Signs of trade tensions weighing on corporate profits and the fading impact of tax cuts would underscore the Fed’s concerns over slowing investment, said Ryan Felsman, senior economist at CommSec in Sydney.

“That feeds into the narrative of concerns around the global economy, the slowing in the U.S. economy, but also the need for potentially more aggressive rate cuts from the Fed to support the U.S. economy going forward,” Felsman said.

Markets have fully priced in a 25-basis point cut by the Fed at its meeting at the end of this month.

In fixed income markets, the yield on benchmark 10-year Treasury notes turned higher to 2.0973% while the two-year yield, closely watched as a gauge of traders’ expectations for Fed fund rates, rose to 1.8416%.

Yields on benchmark 10-year German debt were steady at minus 0.2930% after falling nearly five basis points overnight, its biggest drop in a month.

A survey from Germany’s ZEW institute later on Tuesday is expected to show the mood among investors in the bloc’s largest economy worsened in July after a plunge in June.

Also on the agenda is a vote to name Germany’s Ursula von der Leyen president of the European Commission. She could become the commission’s first female president, but her candidacy is being opposed by European Union socialist and liberal lawmakers.

In the currency market, the dollar was up 0.1% against the yen at 108.01 while the euro bought $1.1244.

The dollar index, which tracks the greenback against a basket of six major rivals, was a touch stronger at 97.063.

Sterling was back on the ropes, falling below $1.25 as Brexit and economic concerns weighed ahead of British labour market data for the month of June, due at 0930 GMT.

Oil prices steadied after earlier easing on signs that the impact of a tropical storm on U.S. Gulf Coast production would be short-lived.

Global benchmark Brent crude was flat at $66.45 per barrel and U.S. West Texas Intermediate (WTI) crude at $59.56 per barrel.

Trade in gold echoed the cautious tone of equity markets ahead of U.S. data. The precious metal was last down 0.03% on the spot market at $1,413.20 per ounce.

Reporting by Karin Strohecker, additional reporting by Andrew Galbraith in Shanghai and Hideyuki Sano in Tokyo; graphic by Ritvik Carvalho, Editing by Shri Navaratnam & Jon Boyle