Capital Spreads called the FTSE 100 up five points at 5841, the DAX six points higher at 7128, and the CAC-40 to add three points at 3910. All these indexes closed with hefty losses of around 2% Monday.
"Sentiment in Europe is expected to be volatile," noted Jonathan Sudaria of Capital Spreads. He added the downgrade of the credit outlook for Italy, political instability in Spain and Monday's downgrade of Belgium's outlook are all expected to be negative influences.
Europe's sovereign debt crisis has continued to send investors around the world in search of safety after voters in Spain provided a thumbs-down on further austerity measures and the credit rating agencies reacted to the weak economic outlook of some euro-zone members.
On Monday, Fitch Ratings lowered its outlook on Belgium to negative, citing concerns about the pace of structural reforms in the coming years and the nation's ability to accelerate fiscal issues without a resolution to the constitutional crisis.
This followed the decision of Fitch to downgrade Greece's credit rating by three notches and Standard & Poor's move to lower its outlook on Italy's A-plus sovereign-credit rating from stable to negative late last week.
And the banking sector is likely to be in focus Tuesday following the decision of Moody's Investors Service to review the ratings of selected U.K. financial institutions given "the changes to systemic support that are evolving in this post-crisis environment."
Political developments are also weighing as in Spain, following a week of anti-government protests, the ruling Socialist Party suffered widespread losses to the conservative Popular Party in regional elections over the weekend.
And in China an early reading of the country's manufacturing activity indicates that it slowed to a 10-month low in May, according to the results of the HSBC survey.
In Asia overnight, stock markets were mixed, with many bourses struggling to make headway amid persistent concerns over euro-zone debt woes, while Shanghai lost ground on worries about China's economic outlook.
Japan's Nikkei Stock Average closed up just 0.2% while China's Shanghai Composite Index was last seen down 0.7%, extending Monday's sharp fall as weak manufacturing data triggered concerns about an economic slowdown. Australia's S&P/ASX 200 ended down 0.3% and Hong Kong's Hang Seng index was largely flat.
In the U.S. Monday, stocks suffered steep losses as investors' concerns over Europe's financial health triggered a flight to safer assets.
The Dow Jones Industrial Average dropped 130.78 points, or 1.1%, to 12381.26, making it the blue-chip index's fifth drop in seven days. Technology and energy stocks led the Standard & Poor's 500-stock index to a 15.90-point decline, or 1.2%, to 1317.37, for the measure's biggest single-day drop since March 16. The technology-oriented Nasdaq Composite lost 44.42, or 1.6%, to 2758.90.
In the foreign exchange markets, the euro was steady but vulnerable to further declines Tuesday as concerns over the euro-zone sovereign debt crisis showed no signs of abating.
At 0635 GMT, the single currency traded at $1.4062 from $1.4047 late in New York Monday. The dollar was at Y81.73, from Y81.99.
Among commodities, spot gold was at $1517.30 per troy ounce, down 25 cents, while the July Nymex crude oil futures contract was up 46 cents at $98.16 per barrel. In the core bond markets, the benchmark June bund futures contract was down just four ticks at 125.14. For the latest updates PRESS CTR + D or visit Stock Market news Today
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