European Shares Seen Clawing Back Losses, Concerns Persist

European shares are called to open slightly higher Tuesday, clawing back some of the losses recorded on Monday when shares posted their worst one-day fall in more than three weeks on concerns that a summit of European leaders later this week will fail to find a solution to the crisis.

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The FTSE 100 is called to open higher by 9 points, the DAX is seen higher by 17 points and the CAC 40 up by 7 points.

Overnight Asian shares were down as optimism remained muted over any substantial movements forward at the June 28-29 EU summit.

The euro clawed back some of its losses to hold steady at $1.2505.

Cyprus confirmed Monday that it would require a bailout as a result of its economy’s high exposure to Greece, compounding the euro zone's woes.

German Chancellor Angela Merkel reiterated her dismissal on the introduction of eurobonds Monday, insisting they were not the right tools to tackle the debt crisis.

Spain will tender up to 4 billion euros ($4.9 billion) in an auction later today in 3 and 6-month T-bills which is expected to see it pay record short-term borrowing costs.

Moody’s, the credit rating agency downgraded the long term debt and deposit ratings for 28 Spanish banks on Monday following its cut to the sovereign just weeks ago.

In a blow to the newly elected Greek government finance minister Vassilis Rapanos resigned Monday following a bout of illness which had seen him hospitalized.

Rapanos was due to attend the EU summit later this week where the country is tabled to discuss possible softening of the terms of its bailout.

The Financial Times newspaper reported that EU officials could get powers to re-write euro zone budgets for countries that breach debt and deficit rules under proposals to be discussed at the summit.