European Shares Expected to Extend Rally

European stocks were seen rising Tuesday, mirroring gains in Asia and extending their Christmas rally, although volumes could remain lacklustre ahead of the holiday break.

Sharon Lorimer

European stocks hit a 27-month closing high Monday, with miners rising on buoyant metal prices, and utilities catching up with the rest of the market's recent gains, but in seasonally quiet trade.

Retailers Inditex and Carrefour fell however as snow and freezing temperatures kept shoppers away. Airlines also closed lower Monday with many flights delayed or canceled.

A vote on Spain's 2011 budget takes place on Tuesday afternoon. The country has come under fire and its borrowing costs have surged amid fears that the country will need to seek a bailout from its European peers.

Fears that the European debt crisis is far from over persisted on Monday after the European Central Bank expressed "serious concerns" that Ireland's bailout package could affect the bank's liquidity operations in the euro zone.

ECB President Jean-Claude Trichet said euro zone countries must do more individually and collectively to combat the bloc's debt crisis, but he also dismissed a breakup of the euro zone as an "absurd hypothesis".

Currency investors pushed the euro to an all-time low against the Swiss franc on Monday amid the concerns over euro zone debt, sparking rumors that the Swiss central bank will fight an excessive appreciation of the Swiss franc as it might hurt exports.

"The Swiss are going to be up in's starting to get out of control, that's very clear," Boris Schlossberg, director of currency research at GFT Forex told CNBC.