Spain's IBEX 35 stock index opened Tuesday's session in positive territory, reaching its best level since August 2015, as investors awaited a key US inflation report, which is likely to shape the Federal Reserve's interest rate outlook.

This week, all eyes will be on Wednesday's consumer price index (CPI), which is expected to show that underlying consumer prices rose 0.3% month-on-month in April, down from 0.4% growth the previous month, according to a Reuters poll.

But before that, on Tuesday at 1230 GMT, the producer price index (PPI) will be released, which analysts will be looking at to see if inflation is getting closer to the Fed's 2% target.

Nearly two-thirds of economists expect the Fed to cut its main interest rate twice this year, starting in September, according to a Reuters poll. This is higher than slightly more than half of economists in the previous survey.

At 0705 GMT on Tuesday, Spain's selective IBEX 35 stock index was up 37.50 points, 0.34%, to 11,189.50 points, its best level since August 2015, while the FTSE Eurofirst 300 index of large European stocks retreated 0.06%.

In the banking sector, Santander lost 0.33%, BBVA scored 0.14%, Caixabank advanced 0.31%, Sabadell fell 0.72%, Bankinter appreciated 0.21% and Unicaja Banco rose 0.08%.

Among the large non-financial stocks, Telefónica gained 0.07%, Inditex advanced 0.14%, Iberdrola rose 0.49%, Cellnex gained 1.24%, and the oil company Repsol rose 0.34%.

Ferrovial gained 2.91%, after reporting on Monday after the close of the European markets a 37.6% increase in adjusted ebitda for the first quarter.

The real estate group Colonial advanced 1.29%, after reporting that its first quarter profit doubled compared to the previous year.

(Reporting by Benjamín Mejías Valencia; edited by Javi West Larrañaga)