European shares were called to open flat to slightly lower on Monday with Spain at the forefront of investors’ minds as it was expected to formally ask its euro zone partners for up to 100 billion euros ($125 billion) to recapitalize its banks.
The FTSE was seen opening 5 points higher at 5513
the DAX was expected to open 23 points lower at 6240 and the CAC 40 was seen opening lower by 8 points at 3082.
European leaders will discuss specific steps towards a cross-border banking union, closer fiscal integration and the possibility of a debt redemption fund at the summit.
The meeting will not be attended by new Greek prime minister Antonis Samaras who is recovering from an eye operation.
Greece will still put forward proposals aimed at easing the terms of its bailout but international lenders have had to postpone a first meeting with the team.
A French proposal for euro zone bonds is also likely to be on the agenda. The proposal put forward by new French president Francois Hollande is expected to meet stiff opposition from German chancellor Angela Merkel who has shown little sign of budging from her position on the issue.
German resistance to such proposals and Merkel’s refusal last week to provide any relief to Spain or Italy at a meeting of the four leaders of the euro zone’s largest economies threatened to turn the Summit into a fiasco, billionaire investor, George Soros wrote in the Financial Times on Monday.
He added lack of progress at the Summit would leave the euro zone “without a strong enough firewall to protect it against the possibility of a Greek exit.” Meanwhile, the Bank of England needs to pump at least another 50 billion pounds ($77.2 billion) into the British economy, a member of the central bank’s interest rate setting committee told the Financial Times in an interview.
David Miles warned only a “substantial” third round of quantitative easing would kick start a recovery in the UK economy. Last week the minutes from the Bank’s June meeting showed the committee split 5-4 against making more asset purchases in the month but most expect the Bank to take the step at its next meeting.
In corporate news, the head of Europe's drug industry has written to EU leaders seeking major concessions to help keep supplies of medicines flowing to crisis-hit countries like Greece and Spain.
Drugs companies want two special measures to prevent discounts being provided to southern European nations being expected in richer states to the north where government can afford to pay for innovation.
Samsung Electronics shares tumbled as much as 4 percent to a four-and-a-half month low in Asia on Monday, after more brokerages slashed their second quarter profit outlook for the electronics giant, citing persistent weakness in the micro-chip market.
In Egypt, the Muslim Brotherhood was celebrating on Sunday as its candidate for president was duly announced the winner of presidential elections held last weekend.
Mohamed Morsi was declared Egypt's first freely elected president, sparking joy among his supporters on the streets who vowed to wrest more power from ruling military generals reluctant to cede ultimate control.