The FTSE 100 <.FTSE> index is seen opening up 21-33 points, or 0.6 percent on Tuesday, according to financial bookmakers, tracking a turnaround on Wall Street as optimism about the euro zone debt crisis ebbs and flows.

Italy, the third biggest economy in the euro zone, faces a crucial vote on public finance in parliament on Tuesday and the centre-left opposition said it was preparing a motion of no-confidence in the government that would bring down prime minister Silvio Berlusconi if he should survive Tuesday's vote.

Italian government bond yields soared to near 15-year highs, putting the country at the centre of the region's debt crisis, despite efforts by scrambling policymakers to stem the growing contagion.

Greek party leaders, meanwhile, are struggling to agree on a new prime minister. The Greek cabinet was due to hold an emergency session on Tuesday and officials said negotiations were under way on the 100-day coalition which must win parliamentary approval for a euro zone bailout and save the country from bankruptcy.

Against this uncertainty the mood could certainly shift quite rapidly once again and any marginal gains that we're looking for as European gets underway could easily be undone, said Terry Pratt, Institutional Trader at IG Markets.

The UK blue chip index closed down 16.34 points, or 0.3 percent on Monday at 5,510.82 as the political turmoil in Italy sparked fears over further debt contagion in the euro zone.

U.S. blue chips <.DJI>, however, closed a volatile, lightly traded session 0.7 percent higher on Monday, with sentiment continuing to shift with the latest headline from Europe.

Wall Street spent most of the session lower before rebounding after Juergen Stark, a member of the European Central Bank's Executive Board, said the region's debt crisis might be overcome in one or two years at the latest.

Asian shares were equally as volatile on Tuesday, falling back after earlier gains, with the MSCI's broadest index of Asia Pacific shares outside Japan <.MIAPJ0000PUS> down 1.5 percent.

The banking sector will be in the spotlight with part-state-owned Lloyds Banking Group set to continue the domestic reporting season, and after France's Societe Generale posted a slump in quarterly profits, hit by charges including Greek debt writedowns, and scrapped its 2011 dividend.

On the macroeconomic front, the number of houses sold in England and Wales reached an 18 month high in October as prices kept falling, a Royal Institution of Chartered Surveyors survey showed on Tuesday.

Meanwhile, retail sales softened in October as careful shoppers kept their purses shut and cut back on non-food items, the British Retail Consortium said on Tuesday.

Industrial and manufacturing output numbers for September will be released at 9:30 a.m., with a 0.1 percent monthly rise forecast for both.

Across the Atlantic, November U.S. IBD consumer confidence numbers will be released at 3 p.m.

(Editing by Mike Nesbit)