The sell-off in European stocks and the euro eased on Tuesday but concerns the region remains a long way from solving its sovereign debt crisis was seen likely to keep the pressure on.

The euro, which plumbed two-month lows in Asia of around $1.3160, was rescued by some short covering to steady at around $1.3190, little changed on Europe's previous session.

The main European stock index, FTSEurofirst 300 <.FTEU3> was up 0.4 percent shortly after the market opened after falling 1.9 percent on Monday in reaction to concerns last week's EU summit failed to ease the debt crisis in the short term.

Banking stocks could return to centre stage on equity markets after sources familiar with the matter told Reuters the German lender Commerzbank and the government have been in talks for several days over possible state aid.

While Commerzbank, 25 percent owned by Germany, wants to avoid state aid, it needs to find 5.3 billion euros ($7 billion) capital by mid-2012 to meet European Banking Authority capital rules.

Moody's rating agency also put eight Spanish banks on review for possible downgrade including, Banco Sabadell , Bankia , Bankinter and CaixaBank .

German Bunds were broadly flat as the debt markets worried over the risk of sovereign credit rating downgrades across the euro zone.

A survey of German analysts and investors was expected to show worsening sentiment in the euro zone with its index seen falling to -56.5 in December from November's reading of -55.2.

Market activity is likely to be subdued ahead of the release of U.S. retail sales for November due out later and the outcome of the Federal Reserve's FOMC meeting, though no change in U.S. interest rates is expected.

(Editing by Anna Willard)