All eyes will be on Paris on Tuesday as French President Nicolas Sarkozy meets his German counterpart Angela Merkel to discuss the crisis in the euro zone.
A report in Spanish newspaper El Mundo said that the leaders of the euro zone's biggest economies will discuss the possibility of a European economic authority, to improve the coordination of economic and monetary policies in the region and the creation of a European Monetary Fund.
The euro was steady against the dollar in Asian trade, hanging on to the majority of gains made on Monday and amid optimism that Tuesday's Franco-German summit will shed new light on how to contain the debt crisis in the periphery.
French and German policymakers have expressed little enthusiasm for the issuance of euro bonds as a way of tackling sovereign debt, but support for such a policy has gained momentum with the euro area and President Sarkozy and Angela Merkel might have to consider euro area bonds as an option.
Economic releases out on Tuesday include a raft of GDP data, including growth figures for Germany for the second quarter at 7:00am London time, followed by Spanish preliminary figures at 8:00am and euro zone and Portuguese GDP flash estimates at 10:00am.
In Italy, unions are expected to protest against austerity measures recommended by the European Central Bank and the EU, while business leaders are likely to oppose the recommendation of a new tax on wealthy Italians as discussions on the measures get underway in the country's Senate.
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