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FTSE, CAC, DAX to Open Lower, S&P Warning Weighs

European stocks were called to start the day lower on Tuesday tracking Asia overnight, where shares and the euro fell following a warning by credit rating agency Standard and Poor's (S&P) that it could downgrade a swathe of euro zone countries if policymakers fail to reach a deal at a crucial summit on Friday.

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The FTSE is called 57 points lower, the DAX in Frankfurt is expected to open down by 68 points and the CAC 40 is called 30 points lower.

The warning by Standard & Poor's on Monday brought a rally in global stock exchanges to an end, after German Chancellor Angela Merkel and French President Nicolas Sarkozy had announced earlier in the day that they had agreed a plan to bring to the summit of European Union leaders on Friday.

S&P responded to the Franco-German meeting by placing 15 euro zone countries – including France and Germany – on credit watch negative.

The rating agency said "systemic stresses" are increasing within the euro zone as credit conditions tighten and added it expects to conclude its review of euro zone economies "as soon as possible" after EU heads of state meet in Brussels on Friday.

French Finance Minister Francois Baroin reacted defiantly to the S&P warning, telling French television late on Monday that the French government's austerity plans were sufficient to meet next year's deficit reduction targets.

He also rejected S&P's claim that there would be a need for a further capital injection into the French banking system, telling TV channel France 3 that the public would not need to contribute any more to aid troubled banks.

Angela Merkel and Nicolas Sarkozy also responded to the S&P warning, saying they were determined to "take all measures to secure stability in the euro zone." The leaders agreed on Monday to press ahead with plans to alter the European Union treaty so that euro zone countries would be forced to adhere to strict budgetary rules and face automatic sanctions if they fail to meet them.

Merkel and Sarkozy also said they had agreed to bring forward full implementation of the permanent euro zone bailout fund, the European Stability Mechanism (ESM), from 2013, to 2012 and there will be a monthly meeting of euro zone leaders until the crisis is resolved.

US Treasury Secretary Timothy Geithner will arrive in Frankfurt on Tuesday for meetings with European Central Bank chief Mario Draghi and Bundesbank president Jens Weidmann.

In the afternoon he is due to meet with German Finance Minister Wolfgang Schaeuble in Berlin to discuss the debt crisis engulfing the euro zone and its impact on the wider world.

In Ireland, Finance Minister Michael Noonan will present the country's Budget to parliament, the first for the ruling Fine Gael party since they were elected earlier this year.

Corporate data to watch on Tuesday includes low cost airline Easyjet traffic figures, Glencore group preliminary data and building supplies firm Wolseley will release first quarter results.

Economic releases include a European Union third quarter GDP estimate at 10:00am London time and German manufacturing orders for October will be available from 11:00am.