European stocks were called to open lower on Thursday following large declines in Asia and Wall Street and downgrades of five major European banks by credit rating agency Fitch.
The FTSE is called 6 points higher, the DAX in Frankfurt is expected to open down by 6 points and the CAC 40 is called higher by 5 points.
In Asia overnight, shares fell along with commodities and the eurowhich dropped below $1.30, close to an 11-month low.
On Wall Street the S&P 500 and Dow Jones Industrial Index lost around 1 percent each and all ten sectors on the S&P 500 ended Wednesday in negative territory.
Gold prices fell below their 200-day moving average for the first time since January 2009 and the price of US crude fell below $96 a barrel as commodities were hit hard by a third straight day of sell-offs in the US.
Fitch Ratings announced on Wednesday that it had downgraded five major European banks including Banque Federative du Credit Mutuel, Credit Agricole, Danske Bank, OP Pohjola Group and Rabobank Group.
The rating agency warned of a "broader phenomenon of stronger headwinds facing the banking industry as a whole" and in the case of Danske Bank and Credit Agricole "exposure to troubled euro zone countries through their subsidiaries" was a "direct consideration" in their downgrades.
However, European Central Bank official Christian Noyer questioned the credibility of rating agencies in an interview with French newspaper Le Telegramme de Brest published on Thursday.
Noyer said a downgrade of France's triple-A credit rating would not be justified and he believed downgrade decisions were informed more by political consideration than economic ones.
A Wall Street Journal report late on Wednesday said that British financial regulator the Financial Services Authority (FSA) met with top risk officers at UK banks to discuss contingency plans for a possible euro zone break up as the British banking sector prepares for the worst.
The debt crisis in the euro zone was pinpointed by the Chinese Commerce Ministry on Thursday when spokesman Shen Danyang announced China's exporters will face "very severe" conditions in the first quarter of next year.
His comments followed news that Chinese factory output contracted in December due to waning global demand.
In Brussels, an EU-Russia summit will continue on Thursday with European Council President Herman Van Rompuy and Russian President Dmitry Medvedev in attendance.
A Reuters report suggests the two could discuss the possibility of Russian contributions to aid stability in the euro zone and a press conference is scheduled for 1:00pm London time.
European Central Bank President Mario Draghi will deliver the ninth Ludwig Erhard lecture in Berlin on Thursday and the World Trade Organization Conference opens in Switzerland.
Spain will hold an auction of medium term bonds on Thursday, with 5-year yields expected to undercut those of Italy's which hit a record high on Wednesday of 6.47 percent.
The final auction of the year for Spain will take place around 9:40am London time.
Economic data to watch includes euro zone flash PMI for December at 9:00am UK time, the ECB monthly bulletin also at 9:00am and UK retail sales data at 9:30am.