The FTSE 100 index is seen falling on Tuesday, tracking weakness overnight in Asia, after ratings agency Standard & Poor's warned it may downgrade 15 euro zone countries, including top-rated Germany and France, if EU leaders fail to agree on a plan to solve the debt crisis at a summit on Friday.

The UK benchmark <.FTSE> looks set to shed 42 to 57 points, or as much as 1 percent, according to financial bookmakers, having risen 15.67 points, or 0.3 percent, to 5,567.96 on Monday, its highest close since Oct 28

The ratings agency's threat to downgrade euro zone countries en masse came hard on the heels of a Franco-German initiative, to be discussed on Friday, to enforce budget discipline across the 17-member zone through EU treaty changes.

This action by Standard & Poors more or less kills the EFSF (European Financial Stability Facility) stone dead as it would mean that it would be unlikely to carry a triple 'A' rating, especially if France is downgraded, which now seems increasingly likely, Michael Hewson, analyst at CMC Markets, said.

It also seems likely to raise the political pressure in Germany with respect to the costs of closer integration. This it would seem is the price of admission towards closer fiscal integration, the question now being asked around Europe in the triple 'A' countries is whether it's a price worth paying?

The latest third-quarter GDP data from the euro zone, scheduled for release at 10 a.m. British time, looks set to fall under the spotlight on Tuesday.

In terms of domestic economic data, British retailers last month suffered their biggest annual fall in like-for-like sales since May, as widespread discounts failed to lure in pre-Christmas shoppers, the British Retail Consortium said.

* Nikkei falls 0.

UK stocks to watch on Tuesday are:

LONDON STOCK EXCHANGE

The London Stock Exchange and Russia's two main exchanges, Micex and RTS, are vying to secure a strategic partnership with the Kazakhstan Stock Exchange, the Financial Times reported.

INTERMEDIATE CAPITAL GROUP

Intermediate Capital Group is looking to sell CPA Global, one of the largest patent management groups in the world, barely two years after buying into it, the Financial Times reported.

WOLSELEY

The building supplies group issues a trading update.

EASYJET

The budget airline issues traffic figures.

VICTREX

The manufacturer of high performance polymers issues full-year results.

NORTHGATE

The van hire company reports first-half results.

MONKS INVESTMENT TRUST

The company reports first-half results.

ELECTRA PRIVATE EQUITY

The company reports full-year results.