European stocks were called to open higher on Wednesday after shares rose and the euro steadied in Asia overnight on news that Italian Prime Minister Silvio Berlusconi would resign after he lost his parliamentary majority in a crucial vote on Tuesday afternoon.
The FTSE is called 65 points higher, the DAX in Frankfurt is expected to open up by 33 points and the CAC 40 is called higher by 40 points.
Berlusconi said he would step down as Prime Minister after the Italian parliament approves a budget law which will include reforms demanded by Italy's European partners.
European Commission officials arrive in Italy to monitor reforms from Wednesday but the Italian ambassador to the European Union, Ferdinando Nelli Feroci downplayed talk of a full-scale "inspection", telling reporters on Tuesday that the monitoring mission "is a dialogue, not an inspection".
However, fears persist that the euro zone's third largest economy is on the brink of a debt crisis of Grecian proportions, which could have a disastrous impact on global markets.
Doubts still remain over who will succeed George Papandreou as Prime Minister of Greece after a source told Reuters on Tuesday that the Socialist and Conservative parties have doubts over former European Central Bank vice-president Lucas Papademos. Papademos emerged as a frontrunner to replace Papandreou earlier this week, but the source claims his candidacy "has hit problems that have to do with both parties."
Greek lawmakers have delayed a decision on who will become the next Prime Minister until later on Wednesday.
Deutsche Bank CEO Josef Ackermann told the FT on Wednesday that banks risk greater exposure to future financial crises due to the precedent set by European Union plans to restructure Greek debt. Ackermann warned that private sector involvement in the Greek bailout plans should be an "exception" and he warned: "If you open up a Pandora's Box, then who is willing to invest in sovereign risk? The violation of a risk-free asset class will have long-term consequences."
IMF Managing Director Christine Lagarde told a financial forum in Beijing on Wednesday that an enhanced European Financial Stability Fund (EFSF) agreed by euro zone leaders could be in place as early as December, but she warned of economic "clouds on the horizon" in the European Union and the US. Lagarde also said that China needed to adapt its economy from an export-led growth model to a more balanced one.
The IMF chief will be in China for two days from Wednesday before heading to Japan on Nov 12.
European Commission President Jose Manual Barroso will give a speech in Berlin on Wednesday on the state of the European Union in light of recent events and the economic crisis.
Thousands of students are expected to take to the streets of London on Wednesday to protest against the UK government's university tuition fee plans, austerity measures and privatization. A large police presence is likely to be deployed as the government is keen to avoid the violent scenes of previous protests in the British capital.
Key corporate releases due on Wednesday include Franco-Belgian bank Dexia which is expected to announce third quarter data at 8:30 London time and energy firm E.on which reports at 7:30.
Deutsche Post third quarter earnings are due at 6:00, while chemical and consumer goods firm Henkel reports at 6:30.