FTSE, DAX, CAC Called Slightly Higher; Euro Zone Worries Linger
European stocks were called to open slightly higher ahead of a Spanish bond auction on Thursday, while the euro stayed close to a 16-month low in Asia overnight amid lingering concerns over sovereign funding in the euro zone.
The FTSE is called 9 points higher, the DAX in Frankfurt is expected to be up by 18 points and the CAC 40 is called higher by 17 points.
Reuters reported late on Wednesday that discussions with private holders of Greek debt over contributions to the next tranche of bailout aid for Greece were faltering and it could fall to euro zone countries to contribute larger amounts to the country's next rescue package.
The news agency quoted a banker involved in the discussions who claimed governments were "mulling" stepping up their contributions, while an IMF source said governments would have to provide further funding to ensure the IMF contributed more to the next tranch of aid for Greece.
The President of Richmond Federal Reserve Bank Jeffrey Lacker told CNBC on Wednesday that US banks have reduced their exposure to Europe and should be able to cope with the impact of Europe's debt crisis, but money market funds remain at risk. He added that he expects the US economy to grow by 2 to 2.5 percent in 2012.
Italian stock market regulator Consob announced on Wednesday that a ban on short selling of financial stocks would be extended by six weeks to February 24. The short selling ban covers stocks in the banking and insurance sectors and coincides with a period when European banks need to raise fresh capital in markets jittery over the debt crisis in the euro zone.
A 3 to 4 billion euro ($3.8 billion - $5.08 billion) auction of Spanish 3-year bonds is scheduled for 9:30 GMT on Thursday and Italy will hold an auction of 12-month Treasury bills and flexible Treasury bills at 10:00 GMT. These auctions will bring two of the euro zone's most indebted nations back into focus and investors are likely to view the tenders as a crucial test of confidence.
In Paris, credit rating agency Fitch will present its credit rating outlook for Europe at 6.45 UK time, while German Finance Minister Wolfgang Schaeuble meets his French counterpart Francois Baroin in Berlin on Wednesday afternoon.
IMF Chief Christine Lagarde will meet Hungarian minister Tamas Fellegi in Washington for an "informal" discussion on a possible aid request from the troubled eastern European nation.
Key corporate releases to watch on Thursday include final third quarter results from Europe's largest sugar producer Südzucker , while British retailer Tesco is due to release a trading statement on Thursday.
The Bank of England will announce its latest interest rate decision at 12:00 UK time, followed by the European Central Bank at 12:45.