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European Stocks Set for Heavy Losses, Italy in Focus

Following a late selloff on Wall Street Tuesday and more losses for Asia on Wednesday, European stocks are expected to open sharply lower at the start of trade.

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The FTSE is called lower by 79 points, the DAX by 96 points and the CAC 40 down by 46 points.

With the debate over raising the debt ceiling now behind us, investors have begun to fret over the health of the global economy whilst focusing back on the euro zone debt crisis.

Wednesday’s session is likely to be dominated by the Italian market following a jump in bond yields for the euro zone’s third largest economy which along with Spanish yields hit a 14-year high on Tuesday.

At 15:00 CET Silvio Berlusconi is expected to address both houses of Italy’s parliament whilst economy minister Giulio Tremonti is due to meet with the chairman of the euro group, Jean-Claude Juncker in Luxembourg amid fears the recent Greek rescue package has failed to stop contagion spreading to the country most consider too big to fail and too big to bail.

Italian banking giant Unicredit is due to report second quarter profits later this afternoon following weeks of heavy losses which the CEO Federico Ghizzoni has said bear no relation to the bank's fundamentals and are simply the result of an attack by short-sellers.

Before the market open we get earnings from French banking group Societe Generale whilst in London, Asia-focused Standard Chartered reported a 17 percent rise in first-half pretax profit, beating analysts' forecasts.

CEO Peter Sands will join CNBC First at 9:15 CET.