European shares were set to slip on Wednesday, reversing the previous day's gains and tracking weak US and Asian markets, as a slowing pace of economic growth and worries over the euro zone debt troubles prompted a pullback in risk appetite.
Britain's FTSE 100 was seen down 49 to 53 points, or 0.9 percent lower, while Germany's DAX was set to dip 61 to 62 points, or 0.9 percent and France's CAC 40 was seen down 32 to 39 points, or 1 percent lower, according to financial spreadbetters.
Germany, Xetra Dax-listed airlines Lufthansa and Air Berlin are likely to see their share prices move as all Berlin airports will remain closed today between 10:00am and 6:00pm due to the volcanic ash cloud from Iceland.
Lufthansa said takeoff and landing cancellations from Berlin, Bremen and Hamburg will impact 150 flights.
The euro zone's debt problems and the possibility of a debt restructuring for Greece had cast a shadow on financial markets, with policy options to avert a Greek default narrowing, and the country highlighting its urgent need for more cash from the European Union.
The European Central Bank and ratings agencies have told politicians that options they are exploring to lengthen the maturities on privately held Greek debt would be interpreted as a default-like "credit event", triggering further downgrades and disqualifying Greek bonds as collateral.
"The risk off trade looks set to resume as traders see little chance of stability returning to the markets any time soon," said Jonathan Sudaria, a dealer at Capital Spreads.
"Despite ECB member Christian Noyer describing a restructuring of Greek debt as a 'horror' yesterday, traders now see it as inevitability." Shares on Wall Street slipped on Tuesday as investor sentiment remained fragile in the face of recent soft economic data, which pointed to signs of a slowing in the pace of economic recovery.
Latest data from the central Atlantic region showed manufacturing stalled in May after expanding for seven months, following weak New York and Philadelphia Fed manufacturing surveys last week.
In Asia, Japan's Nikkei shed 0.6 percent while the MSCI Asia ex Japan index slipped 1.2 percent.
The pan-European FTSEurofirst 300 index of top shares rose 0.2 percent to close at 1,118.76 points on Tuesday in a brief rally following hefty falls on Monday.
The index closed below its 200-day moving average line, a bearish technical indicator that pointed to a weak trend.