European shares were called to open higher on Wednesday after finance ministers from the G7 major economies discussed progress toward financial and fiscal union in Europe in an emergency call on Tuesday and agreed to work together to deal with problems in Spain and Greece, but took no joint action.
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European Central Bank
The FTSE is called to open 27 points higher at 5287, the DAX is seen opening 66 points higher at 6035, while the CAC is expected to open 28 points higher at 3014.
Investors were likely to spend much of Wednesday waiting for any policy announcement from the European Central Bank (ECB), which meets to set interest rates in the euro zone for the month. The ECB is expected to hold back from any policy moves and is instead likely to urge governments to address the euro zone crisis. But it could also indicate a readiness to cut interest rates as early as next month, given a weakening economy and Spain's banking troubles, when ECB president Mario Draghi holds his monthly press conference at 2:45 p.m. (9:45 a.m. New York time).
Separately, the Bank of England also meets on Wednesdayto decide policy moves for the UK. A cut in interest rates as recommended by the International Monetary Fund (IMF) or further monetary easing are both seen as possible. Any policy move in the UK will be announced on Thursday.
The European Commission will unveil new plans for winding up failing banks, one of the pillars of the EU's drive toward an integrated euro zone "banking union" on Wednesday.
Underlining the concern that the euro zone crisis is creating around the world, a top White House aide said on Tuesday that the G20 summit in Mexico later this month was expected to be marked by an "overwhelming consensus" on the need to spur global economic growth but that the euro zone crisis poses the greatest threat to that aim.
Concern over the stability of Spain persists, with European officials reported to be considering whether to offer Spain a precautionary credit line via the Eurozone rescue fund to help it shore up its ailing banking sector, a German newspaper reported on Tuesday, citing several unidentified sources.
Meanwhile the country, which on Tuesday expressed fearthat high yields would lead to it losing access to credit markets, has made no request for aid from the European Union, EU Economic and Monetary Affairs Commissioner Ollie Rehn said.
Separately, Spain will name its new central bank governor on Thursday with former ECB board member Jose Manuel Gonzalez-Paramo and Luis Maria Linde, a former general director at the Bank of Spain, seen as joint favorites for the job.
Further afield, Australia's economy grew a surprisingly strong 1.3 percentlast quarter as spending by households and businesses far outpaced expectations, boosting the Aussie dollar and perhaps lessening the urgency for further aggressive cuts in interest rates.
In the U.S., Federal Reserve Bank of Chicago President Charles Evans said an expansion in monetary easing was necessary to help ensure economic growth, because there are still too many unemployed workers, and signs of sustained price increases remained subdued.
Meanwhile, U.S. bank regulators will review whether JPMorgan executives should have to give back compensation due to the bank's failed hedging strategy that has produced at least $2 billion in losses, the head of the Office of the Comptroller of the Currency said.
In written testimony prepared for a Senate Banking Committee hearing on Wednesday and obtained by Reuters, Curry also said JPMorgan's trading loss will affect its earnings but does not present a solvency issue and does not threaten the broader financial system.
Morgan Stanley began lending out Facebookstock to sell short, sources told CNBC on Tuesday. The bank, the lead underwriter on Facebook's initial public offering, typically waits at least three or four days before lending shares to short sellers, but in this case it has waited much longer, the report said, without giving a reason. Nasdaq officials were reportedly telling brokers on Tuesday they intended to submit plans to compensate investors for the botched launch of Facebook’s initial public offering later on Wednesday.
Asian shares nudged up on Wednesday but were capped by concerns that Europe's financial strains could intensify without a global response, after Spain warned it was being shut out of credit markets.