European stocks were called to open lower on Tuesday, a day ahead of a second summit of European leaders where a deal is expected to be reached over the nature of a plan to resolve the sovereign debt crisis in the euro zone.
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Financial spreadbetters expected Britain's FTSE 100 to open down 19 to 23 points, or as much as 0.4 percent, Germany's DAX to open 16 to 20 points, or as much as 0.3 percent, and France's CAC 40 to open down 12 to 14 points, or as much as 0.4 percent.
In Asia overnight, stocks rose and the euro held steady as investor optimism rose amid reports that euro zone policymakers are set to agree on plans to recapitalize European banks and the function of the European Financial Stability Facilitybailout fund.
An advisor to German Chancellor Angela Merkel said late on Monday that the EFSF would be leveraged to 1 trillion euros ($1.39 trillion) in a meeting with German policymakers, attended by the German leader.
Dow Jones reported on Monday evening that the European Union is also considering asking the IMF to administer a special debt crisis fund to offer assurance to potential financiers from outside of the European Union. However, head of the French Banking Federation Frederic Oudea warned that a haircut of 50 percent to sovereign debt held by private investors could hit investor confidence hard and have a detrimental effect on the sovereign debt of other struggling euro zone nations, including Italy.
Italy will be high on the agenda at Wednesday's summit after European leaders gave the Italian Prime Minister Silvio Berlusconi a strong warning to get his nation's books in order by introducing sweeping economic reforms as soon as possible. Berlusconi took the opportunity to hit back at his European partners on Monday, claiming none of them were in a position to lecture others. He added that he would present proposals at Wednesday's summit, but no deal has been reached within Italy yet on pension reforms, according to reports.
Some welcome news for Europe came on Monday night when the British parliament rejected a call for a referendum on leaving the European Union, but Prime Minister David Cameron faced a revolt by over a quarter of his party who voted in favor of holding a national vote on EU membership.
A raft of corporate data out of Europe on Tuesday includes Deutsche Bankthird quarter results which showed a better-than-expected rise in pretax profit to 0.9 billion euros ($1.2 billion). However, pretax profit from the corporate and investment banking arm fell to 329 million euros ($457 million).
Swiss Bank UBSreported a net profit of over 1 billion Swiss francs ($1.13 billion) on Tuesday, while revenue reached 6.4 billion Swiss francs ($7.26 billion), beating forecasts.
Swiss pharmaceuticals firm Novartis will report third quarter data at 7:30 UK time.
In the UK, software company Arm Holdings reported third quarter revenue of £120 million ($191.7 million) and pretax profit of £55.8 million ($77.5 million), slightly higher than expectations.
Oil giant BP announces its third quarter data on Tuesday as well as oil and gas firm BG Group . The UK's largest food producer Premier Foods will release second quarter trade data.
Key economic news on Tuesday includes the British Bankers' Association September survey of retail banking groups out at 8:30 and second quarter balance of payments figures from the UK will also be available from 8:30.