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European Shares Seen Higher as Hopes Grow for Rate Cut

European shares are called to open the day slightly higher as trading is expected to be thinner due to the Fourth of July public holiday in the United States and the closure of markets there.

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The FTSE 100 was called to open higher by 8 points, the DAX is seen up by 9 points and the CAC 40 higher by 3 points.

European shares closed Tuesday’s session at a two-month high on the back of renewed hopes that European policymakers – in particular the European Central Bank – may take decisive steps to tackle the debt crisis.

Expectations are high that Thursday will see a rate cut by the ECB and potentially more monetary measures to tackle the crisis.

In an interview with CNBC International Monetary Fund head Christine Lagarde said more monetary easing was not necessarily the right thing for the entire euro zone, citing Germany as an example of a country which did not need lower interest rates.

She said: “You can't dissociate when you use that kind of monetary policy instrument.”

The Libor-rigging scandal will move up a gear with the expected appearance of ex-Barclays Chief Executive Bob Diamond in front of U.K.

MPs, which is threatening to pull in core figures from the Bank of England and previous government.

Barclays’ published a memo Tuesday night which revealed that ex-Chief Operating Officer Jerry del Missier understood that the government and BoE would approve if Libor rates were manipulated at the height of the banking crisis in 2008.

German Chancellor Angela Merkel and Italian Prime Minister Mario Monti meet in Rome in what is billed as a routine meeting to discuss government level issues.

Merkel is facing domestic pressures following reports that one of her coalition partners threatened to topple the government over the apparent softening stance of the Chancellor at the European summit last week on giving troubled euro zone countries loans without rigorous conditions attached.

In bond auction news Germany tenders 4 billion euros ($6.3 billion) in 5-year bonds at 10:00 BST.

Contact Europe: Economy

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