FTSE, DAX, CAC Seen Up on Euro Zone Hopes
European stocks were expected to open higher on Friday after they hit their highest close in five weeks on Thursday. Mining firms and banks were among the best performers after the Bank of England announced fresh stimulus measures for the UK economy and investors remained hopeful that euro zone policymakers would act to recapitalize banks.
The FTSE was called 33 points higher, the CAC 40 in Paris is predicted to be up by 10 points and Germany's DAX is called 27 points higher.
Positive sentiment continued in Asia overnight amid renewed hopes over the euro zone debt crisis, but investors are likely to stay cautious ahead of US September payrolls data due at 13:30 London time. The FTSE CNBC Asia 100 Index , which measures markets across Asia, gained 2.2 percent, while South Korea's KOSPI which suffered some of the biggest drops this week, rose by 2.6 percent.
The euro clung to gains from a 2 cent rally after the European Central Bank announced fresh 12 and 13 month lending operations for banks and the decision to buy 40 billion euros ($53.6 billion) of covered bonds. The common currency last stood at $1.3432, slightly down from a one-week high of $1.3450 immediately after news from the ECB.
However, market watchers say that investors are likely to remain cautious over theEuropean debt crisis and recent rallies in currency and equity markets could run out of steam next week if assurances from the euro area stall.
German business daily Handelsblatt wrote in an advance report from its Friday edition that France and Germany are not in agreement over how the European Financial Stability Fund (EFSF)should be able to buy sovereign debt, citing a high ranking EU diplomat as their source. Disagreement between the euro zone's two biggest economies over rescue plans for struggling peripheral economies will not come as welcome news to investors who sensed this week that some sort of resolution was on the horizon.
More news from the euro zone is expected as German Chancellor Angela Merkel meets Dutch Prime Minister Mark Rutte in Berlin on Friday and Germany's economy minister Philipp Roesler will conclude a two day visit to Greece on Friday where he is due to meet with Greek Prime Minister George Papandreou and Finance Minister Evangelos Venizelos.
Ministers in Belgium will meet at 7:30 UK time on Friday to discuss plans for troubled Franco-Belgian lender Dexiafollowing a downgrade of the group's core banks by Standard and Poor's on Friday. The Dexia board will meet in Paris on Saturday to vote on break-up plans after France and Belgium promised to guarantee its financing after shares took a battering this week.
Economic data to watch on Friday includes UK PPI at 9:30, followed by German industrial production figures for August at 11:00.