The following factors could affect Italian markets on Tuesday.
Reuters has not verified the newspaper reports, and cannot vouch for their accuracy. New items are marked with (*).
POLITICS * Italian Prime Minister Enrico Letta told Il Sole 24 Ore that the government was ready to introduce in the 2014 budget a pledge to use any revenues raised from spending cuts and tax evasion to fund lower labour taxes and a reduction of the so-called tax wedge.
Italy's coalition government said on Monday it would call a confidence vote on its 2014 budget, a move that will give the first clear proof of its strength since Silvio Berlusconi's party split this month.
Letta meets on Tuesday with Russian Prime Minister Vladimir Putin. The meeting will be followed by a business forum with Eni Chairman Giuseppe Recchi, Eni CEO Paolo Scaroni, Enel CEO Fulvio Conti.
National statistics institute ISTAT releases November consumer confidence data (0900 GMT).
The Treasury sells 2.5-3.0 billion euros of a new zero coupon bond maturing on Dec. 31, 2015. Subscriptions close at 1000 GMT. The sale euro zone inflation-linked BTPei bonds was cancelled.
The bank holds a board meeting on Tuesday to discuss "capital operations".
MPS is set to approve a capital increase of up to 3 billion euros, and aims to launch the rights issue as early as January, four sources close to the matter said on Monday. * Swiss bank UBS will guarantee 450-500 million euros of Monte Paschi's capital increase, leading a consortium of nine banks backing the operation, Il Messaggero reported. Goldman Sachs, Citi and Mediobanca will be co-global coordinators and will guarantee 350 million euros of the rights issue. Barclays, Morgan Stanley, BoFA-ML, Commerzbank, Societe Generale are bookrunners with a commitment of 250-300 million euros each.
The ECB will announce the criteria for stress-testing euro zone lenders in an upcoming sector review by the end of January, Il Sole 24 Ore said citing a participant to a meeting on Monday between bank CEOs and the ECB. On-site inspections of ECB and Bank of Italy officials should start in February as part of the asset-quality review, Il Messaggero said.
Italian banks raised the issue of how sovereign holdings will be treated in the stress-tests at the meeting but received no information, Il Sole said. Government bonds will be penalised in the stress tests, MF said citing financial sources.
The Genoa-based lender holds a board meeting on Tuesday to examine a letter sent by market regulator Consob and pointing to irregularities in the financial statements for 2012 and the first-half of 2013, Il Messaggero reported.
Rating agency Fitch revised its outlook on Italy's oil and gas major to negative from stable as the company is struggling to solve problems in Libya and at the Kashagan oilfield in Kazakhstan.
Telco, the holding that controls the Italian phone company, has officially presented a slate of three candidates should shareholders choose to revoke the board at a meeting on Dec. 20, the phone company said on Monday. The candidate are, as expected, Marco Patuano, current CEO of the phone company, Julio Linares, Telefonica's chief operating officer, and law professor Stefania Bariati.
The Italian eyewear company signed an agreement to design, make and sell men's eyeglasses for Fifth & Pacific Cos Inc's Kate Spade in North America, the two companies said on Monday.
The aerospace and defence group is expected to decide on contract for helicopter sale to India.