The FTSE 100 <.FTSE> index is expected to drop on Thursday, extending falls seen in the previous session triggered by mounting worries over Italy's debt situation after a spike in the country's bond yields.
The UK blue chip index looks set to shed 72 to 78 points, or as much as 1.4 percent, after it sank to its lowest close in more than a week on Wednesday, down 106.96 points, or 1.9 percent, to 5,460.38.
U.S. stocks tumbled 3 percent on Wednesday, weakness which spilt over into Asian trade, after Italy was thrust into the spotlight when its 10-year bond yields shot above 7 percent, levels that forced bailouts in Ireland, Portugal and Greece.
The possibility of Italy seeking a bailout will be a disaster and could see a collapse of the euro. It appears the sovereign debt crisis has taken a turn for the worst, said Nam Truong, dealer at Capital Spreads.
In a sign of the depth of fear gripping European capitals, EU sources told Reuters that French and German officials had held discussions about a euro zone split.
While there are a number of economic data releases out on Thursday, traders deemed it unlikely they would provide any real direction, as the heightening of the euro zone debt crisis dominates investors' attention.
In terms of domestic economic data, the Bank of England's November interest rate decision is due at 12 p.m., with no changes expected to monetary policy.
On the U.S. data front, September international trade figures, October import and export prices, and the latest weekly jobless claims are all out at 1:30 p.m., with the October Federal Budget due at 7 p.m.
(Reporting by Tricia Wright. Editing by Jane Merriman)