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European Shares Set to Fall Sharply, HSBC Eyed

European shares were set to fall sharply at the open on Monday, tracking falls in the United States and Asia, with worries over a U.S. recession and bank writedowns at the top of investors' minds.

Financial bookmakers expected Britain's FTSE 100 to open down as much as 1.2 percent and both Germany's DAX and France's CAC-40 to open as much as 1.9 percent lower.

The dollar hit a three-year low against the yen as investors unwound carry trades in which funds are borrowed in the low-yielding Japanese currency to buy higher-yielding assets like equities.

The big earnings event of the day is an update from HSBC, which analysts forecast will take a bad debt charge of $15.8 billion, adding to hefty writedowns by big global banks as a result of a credit market crisis.