Futures on major U.S. stock indices point to a higher opening on Tuesday after U.S. President Barack Obama announced an agreement with Republicans on a plan to extend income tax cuts for all Americans.

Futures on the S&P 500 are up 0.83 percent, futures on the Dow Jones Industrial Average are up 0.71 percent and Nasdaq100 futures are up 0.74 percent.

Obama and Congressional Republicans came to a compromise late on Monday involving tax break extensions for wealthier Americans and unemployment insurance extensions for working class families.

Negotiators for the administration and Republican leadership reached a deal that would cut payroll taxes by 2 percent, extend all Bush-era tax cuts for two years, and extend unemployment insurance for an additional 13 months.

On the economic front, reports on consumer credit, ABC/Washington Post Consumer Confidence and IBD/TIPP Economic Optimism are due to be released during the day.

US stocks ended mixed on Monday after paring much of their losses later in the day on hopes that the Republicans and Democrats in Congress can hammer out a compromise on extending the Bush tax cuts as well as unemployment benefits.

The euro advanced 0.55 percent to 1.3381against the dollar and the yen gained 0.07 percent against the greenback.

Crude oil futures rose 0.43 percent to $89.76/barrel and gold futures advanced 0.56 percent.

European stock markets are currently trading higher with FTSE 100 up by 55.18 points, DAX30 up by 74.22 points and CAC 40 up by 72.48 points.