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Europe to Open Higher Ahead of Portugal Debt Auction

European stocks were indicated to open slightly higher on Wednesday, following positive but muted trade in Asia.

The UK's FTSE 100 index was indicated to gain 14 points to 6,021, while Germany's DAX index was shown to open eight points higher at 7,183, and France's CAC index was set to rise only one point at the open to 4,043, according to IG Markets.

The Bank of Japan is the first central bank to meet this week. The two-day BoJ meeting began as China raised interest rates for the fourth time since October on Tuesday. The PBoC hiked its benchmark one-year deposit rates by 25 basis points to 3.25 percent and one-year lending rates by 25 basis points to 6.31 percent.

Gold and corn prices have pulled back from record highs hit late on Tuesday. Gold hit $1,456.85 an ounce and Chicago Board of Trade corn for May delivery hit an all-time peak of $7.70-3/4.

Portugal will auction up to one billion euros in 6- and 12-month government bonds on Wednesday despite spiking yields and banks' threats to stop buying debt.

Commerzbank may be another stock to watch as the Financial Times reported that the German bank may unveil plans to repay the government after receiving 16.4 billion euros ($23.3 billion) in aid during the financial crisis.

Ireland may also be in the spotlight after Standard & Poor's took various rating actions on the country's banks. S&P lowered its rating of both Irish Life & Permanent as well as Anglo Irish Bank by one notch, to BB+ and CCC+ respectively.

European shares edged up to their highest closein nearly four weeks on Tuesday, with energy firms gaining after unrest in the Middle East and Africa pushed crude prices to a two-and-a-half-year high.

Portugal's sovereign debt was once again downgraded on Tuesday - this time by Moody's rating agency - increasing the pressure for a bailout once again.

Investors are focused on Thursday's European Central Bank interest rate decision and speculation over the bank's expected rate hike and the potential for more rate hikes this year will intensify on Wednesday.

On the macroeconomic front, UK car registration figures for March are due, as well as February industrial production figures.

Germany releases February manufacturing orders and Spain releases industrial production numbers, also for February.

A final reading of euro zone GDP is also out on Wednesday and is expected to confirm a previous estimates of 0.3 percent growth quarter-on-quarter in the fourth quarter of 2010.

Contact Europe: Economy

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