European shares were set to edge up on Thursday, tracking gains on Wall Street and in Asian markets as the U.S. Federal Reserve's commitment to maintain a $600 billion bond-buying program helped cement hopes that monetary policy will remain ultra loose for the time being.
European shares hit a one-week closing high on Wednesday on hopes US President Barack Obama's plan to cut corporate taxesand impose a five-year freeze in some domestic spending will help the world's largest economy.
Concerns over inflation grew stronger on Wednesday, a day after news that the UK's economy contracted in the fourth quarter.
Bank of England policymaker Martin Weale unexpectedly joined Andrew Sentance in voting for a quarter-point rate rise this month, minutes to the BoE's January Monetary Policy Committee meeting showed on Wednesday.
Billionaire investor George Soros told CNBC in Davos late on Wednesday he was not surprised to see a contraction on the UK economy in the fourth quarter.
"The idea that you could balance the budget with the cuts that they have introduced, I don't think will stand up," he said, adding that the contraction was "almost inevitable".
Howard Davies, director of the London School of Economics and previously Deputy Governor of the Bank of England told CNBC in Davos raising rates would be the wrong thing to do at this moment, and said he did not anticipate a double dip recession in the UK.
The Word Economic Forum meeting in Davos continues on Thursday, with over 2,500 leaders from over 90 countries present.
Much of the discussion centered on European sovereign debt at the gathering, with Ireland in the spotlight.
Ireland's parliament narrowly passed a key fiscal bill on Wednesday. It now has just one more hurdle left; the senate will pass its final vote on Saturday.
On Thursday, investors will turn their attention to business and consumer surveys for the euro zone in January.
Also on the agenda are UK house prices for January, Spanish retail sales and French consumer confidence numbers.