Following some disappointing euro zone data this month, the ZEW survey of German business sentiment will be released at 1000 GMT (5 a.m. EST), with investors hoping for signs of a pick up in confidence.

Markets were rattled on Monday by Italian Prime Minister Mario Monti's announcement he would step down early, and the pan-European FTSEurofirst 300 share index .FTEU3 dipped 0.1 percent as trading resumed with concern continuing to weigh.

London's FTSE 100 .FTSE, Paris's CAC .FCHI and Frankfurt's DAX .GDAXI started mixed, while Milan's FTSE MIB .FTMIB lost another 0.2 percent following Monday's sharp drop.

"There's no doubt Monti's resignation raised some concerns," said Katsunori Kitakura, associate general manager of market making at Sumitomo Mitsui Trust Bank.

The other main focus for investors is the Federal Reserve meeting on Wednesday. It is expected to extend its asset purchase scheme and commit to buy $45 billion of U.S. debt per month.

On the bond market, German Bund futures opened slightly stronger, with focus for the session likely to be back on Italian politics. Bund futures were 10 ticks higher at 145.71 while Italian bonds continued to hurt, with yields up 7 basis points to 4.88 percent.

Late on Monday Monti had played down market fears over his decision to resign, saying there was no danger of a vacuum ahead of an election in the spring.

The comments helped the euro find some support, as it hovered above a two week low at $1.2945, up around 0.1 percent from late U.S. levels.

(Reporting by Marc Jones; Editing by Peter Graff)

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