GLOBAL MARKETS: European Stocks Set To Open Lower

LONDON -- European stocks are expected to open lower Tuesday, following a broadly negative session in Asia after U.S. equity markets pared earlier gains as financial stocks suffered a setback.

"Volatility on Wall Street yesterday did little to help install any meaningful confidence in traders as they continue to await the bigger economic numbers due out at the end of the week," said Chris Weston, institutional dealer at IG Markets.

He called London's FTSE 100 index down 30.5 points, or 0.6%, at 5074, Frankfurt's DAX down 26.8, or 0.5%, at 5404 and Paris's CAC-40 15.5 points lower, or down 0.4%, at 3624.

With few important economic data releases on the calendar, earnings were in focus. UBS and Swiss Re both reported, with the former's third-quarter results looking disappointing after its net loss for the quarter was wider than expected.

Meanwhile, news of the next round of recapitalizations at the majority state-owned U.K. banks was closely watched, and Weston said the extent of the disposals could impact wider sentiment.

Elsewhere, Asian share markets were mixed Tuesday in subdued trade as a holiday in Japan kept the regional bourses range-bound.

Australia's S&P/ASX 200 fell 0.1% and South Korea's Kospi Composite declined 0.6%, while Hong Kong's Hang Seng index fell 1.3%. However, the Shanghai Composite index was up 1.2%.

U.S. stocks ended up overall, although it was a bumpy session during which equities were initially pushed higher by reports on manufacturing, construction spending and pending home sales. But a decline in volatile financials weighed on the market later in the session.

Gained 0.8% to 9789.4, marking only the second time in eight sessions that the Dow hasn't closed with a movement of more than 100 points in either direction. The Standard & Poor's 500 rose 0.6% to 1042.9 while the Nasdaq Composite closed up 0.2% at 2049.2.

"Right now, the market is looking back and trying to find more evidence of an economic turnaround," said Daniel Morgan, a portfolio manager with Synovus Securities. "With what we're going into the market with, it's mostly dividend-paying stocks. We think the market's toppy, so at least we'll have the dividend to pay us while we wait for the economy to actually improve."

Elsewhere, gold prices climbed after the International Monetary Fund said it had sold 200 metric tons of gold to India's central bank. The metal was trading at $1061.40 per troy ounce at 0730 GMT, up $7.00 from the New York close.

In the currency markets, the yen firmed and the euro weakened on heightened risk aversion. The euro was trading at $1.4765 at 0730 GMT, down from $1.4776 in late New York trading Monday. The dollar was quoted at Y90.07, down from Y90.21.

Crude oil was stable after rising $1.13 in New York on the back of improved economic data. Nymex December crude was last seen down 15 cents at $77.98 per barrel.

European government bonds started the day higher, in line with the expected fall in equities. At 0735 GMT, December bund futures were up 0.11 at 122.02.