Europe Economy

European Stocks Seen Higher on Euro Hopes

European opening calls were higher on Monday on the back of a positive session in Asia and hopes that the new interim leaders in Italy and Greece will take appropriate measures to curtail the debt crisis.

The FTSE was called higher by 16 points, the DAX by 51 points and the CAC 40 by 24 points.

Italy faces a crucial test when it goes to the markets on Monday with its 5-year bond auction where it is expected to target up to 3 billion euros ($4.13 billion).

This will be closely watched as an initial confidence test for Mario Monti, the former European Commissioner who was appointed to form a government that would protect Italy from the debt crisis.

The yields at which the government will be borrowing will be significant.

Last week, yields on 10 year Italian bonds surged above the 7 percent mark which many in the market see as unsustainable over the long term.

Outgoing Italian prime minister Silvio Berlusconi stated that he was not finished with politics, despite various scandals having clouded his years in office and his advanced age of 75.

In Germany Angela Merkel will attend a two-day party congress on Monday likely dominated by the euro zone debt crisis.

Domestic elections are not until 2013 but her actions now could decide her fate.

She must convince her Christian Democratic Union that greater fiscal and political union is the answer to the euro's survival.

Asia-Pacific leaders pledged on Sunday at the APEC – Asia Pacific Economic Cooperation - meeting that they would bolster their economies and lower trade barriers as they seek to shield themselves against the euro zone crisis.

Japan saw an end to its recession with third-quarter GDP up 1.5 percent from the previous quarter matching forecasts and putting behind it the toll taken on the economy by March's devastating earthquake.