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European Shares Set to Rebound, Merrill Eyed

European shares looked in for a moderate rebound on Thursday, tracking firmer stock markets in Asia led by stronger exporters as the dollar gained some ground against other currencies.

All eyes will be on U.S. Federal Reserve Chairman Ben Bernanke, who is due to testify on the near-term outlook for the U.S. economy before the House Budget Committee at 1500 GMT.

Market players will scrutinize his comments for clues on how aggressively the central bank may slash interest rates at the Fed's next policy meeting on Jan. 29-30.

Financial bookmakers, or spread betters, in London expected Britain's FTSE 100 index to open between 19 and 22 points higher, the German DAX 18 to 22 points higher and the French CAC 40 up 15 to 21 points.

Investors will also watch Merrill Lynch's fourth-quarter results, due before U.S. markets open, which may include sizeable subprime-related writedowns.

Other highlights on the data front will be U.S. December housing starts and weekly initial jobless claims.

The dollar rose against the euro, which dropped sharply on Wednesday on concerns the U.S. economic weakness was spreading to Europe.