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FTSE, CAC and DAX Seen Lower on Debt Worries

European stocks were called to open lower on Tuesday as shares fell in Asia overnight after a rise in euro zone bond yields fuelled investor concerns that heavily indebted Italy and Greece will not enact the necessary austerity reforms to resolve their debt crises.

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The FTSE was called 15 points lower, the DAX in Frankfurt was expected to open down by 49 points and the CAC 40 was indicated to fall 15 points.

Spreads on the iTraxx Asia ex-Japan investment grade index were about ten basis points wider, showing a lack of appetite for risk.

Italian Prime Minister-designate Mario Monti will meet with the leaders of Italy's two biggest parties on Tuesday to discuss the "many sacrifices" Italy needs to make to ease a lack of investor confidence in global markets.

Monti said on Monday that his first day of talks with parliamentary colleagues on forming a new government had been constructive and he hoped to build a coalition that could last until the next scheduled elections in 2013.

Shares dropped and the euro fell on Monday amid fears that new administrations in Italy and Greece might not be able to get to grips with sovereign debt.

In Greece, new Prime Minister Lucas Papademos said on Monday that Greece had no choice but to remain inside the euro zone, while a report on Monday said the situation in France should be "ringing euro zone alarm bells".

Papademos faces conservative opposition in the Greek parliament, after New Democracy conservatives vowed on Monday evening that they would reject a fresh round of austerity measures in return for the next tranche of EU/IMF aid. New Democracy leader Antonis Samaras said he would not sign a new pledge of austerity measures.

The possibility of euro zone members leaving the common currency was raised in Germany on Monday when Angela Merkel's conservative CDU colleagues passed a resolution at their party conference urging the German administration to establish new European rules that would allow a country to pull out of monetary union without leaving the EU.

The CDU conference enters its second day on Tuesday, while the Frankfurt Finance Week conference continues in the southern German city.

Speakers on Tuesday are expected to include Klaus Regling, CEO of the European Financial Stability Facility and Michael Madelain, President and COO of Moody's Investor Services.

The European Commission will propose changes to rules on credit rating agencies such as Moody's and Standard and Poor's on Tuesday, which are expected to tighten current regulations.

Key economic data on Tuesday includes European Union flash estimate gross domestic product, out at 10:00 London time, when the ZEW Indicator of Economic Sentiment in Germany will also be available.

Swedish fashion retailer Hennes and Mauritz announced that its average same-store sales fell 2.7 percent in October compared with a 3 percent rise in October last year, hit by the European debt crisis and unfavorable weather.

From the UK, low cost airline Easyjet releases its full year results on Tuesday, telecommunications firm Cable and Wireless reports interim results and luxury goods firm Burberry is also due to report.