Financial bookmakers expected the blue-chip index to fall as much as 0.5 percent on opening, after it ended up 86.29 points, or 1.6 percent, at 5,382.67 on Monday, its highest close since September 2008 and notching up its fourth consecutive session of gains.

The index is only 0.6 percent below its level before the collapse of Lehman Brothers in mid-September 2008 and has surged 55.5 percent from a six-year low in March.

Investors will eye monthly inflation figures, due at 9:30 a.m.. Consumer price inflation is seen by analysts rising to 1.5 percent year-on-year in October, up from 1.1 percent in the year to September.

Later, U.S. figures on producer price inflation will attract attention. U.S. industrial production numbers will also form a focus.

Federal Reserve Chairman Ben Bernanke said on Monday that regulatory reform has to address the too-big-to-fail issue and it must be possible for financial firms to fail without dragging the broader system with them.

BoE policymaker Andrew Sentance said on Monday that Britain's economy is moving towards recovery and the Bank of England's latest forecasts show the risk of keeping monetary policy too loose for too long.

Stocks to watch on Tuesday:

LLOYDS BANKING GROUP

The bank is attempting to bring about a financial restructuring of the troubled pubs group Admiral Taverns, which may include a 600 million pound debt-for-equity swap, said the Independent.

BRITISH AIRWAYS

The airline has written a letter to the joint secretaries of Unite, saying it will not tolerate union members promoting strike action at work and would consider pressing criminal charges against anyone found putting stickers on the company's property, said the Times.

LONDON STOCK EXCHANGE , IG GROUP

IG Group has connected to the equities trading platform Chi-X Europe in a move that will allow ordinary investors access to the fast growing alternative to the London Stock Exchange, said the Financial Times.

PUNCH TAVERNS , WHITBREAD

Punch Taverns and Whitbread could be forced to take over Threshers stores following the collapse of First Quench Retailing -- the group which owned the wine retailer, reported the Daily Telegraph.

INVESCO PERPETUAL

Invesco Perpetual has launched a new split cap investment trust in response to demand from investors for investments that are taxed as capital gains rather than investments, said the Financial Times.

BRITISH LAND

The property firm reports first-half results.

BURBERRY GROUP

The luxury goods group reports first-half results.

ICAP

The interdealer broker posts first-half results.

INTERTEK GROUP

The testing equipment firm issues a trading update.

SMITHS GROUP

The technology company holds its annual general meeting.

BARRATT DEVELOPMENTS

The housebuilder issues a trading update.

AVIS EUROPE

The car rental firm issues a trading update.

BIG YELLOW GROUP

The self-storage firm posts first-half results.

ENTERPRISE INNS

The pubs firm posts full-year results.

JD WETHERSPOON

The pubs group holds its annual general meeting.

EASYJET

The low-cost airline posts full-year results.

SAVILLS

The real estate consultant issues a trading update.

VT GROUP

The support services firm posts first-half results.

MECOM

The European newspaper group issues a trading update.

WELLSTREAM HOLDINGS

The oil services group issues a trading update.

ARENA LEISURE

The racecourse operator issues a trading update.

CARE UK

The health services and social care provider posts full-year results.

INTELEK

The electronic systems company posts first-half results.

MECOM GROUP

The European newspaper group issues a trading update.

OXFORD INSTRUMENTS

The high-technology tools maker posts first-half results.

VITEC GROUP

The media products firm issues a trading update.

(Reporting by Tricia Wright; Editing by Hans Peters)