European stocks looked set to open mixed with an upward bias on Wednesday after the previous session's relief rally triggered by the U.S. Federal Reserve's surprise 75-basis-point key rate cut.
"Many traders will be looking for a degree of calm ... There still has to be the chance that nerves could get the better of investors and another run of selling may be seen, but there does now have to be the scope to let the focus return to the fundamentals," CMC Markets said in a note.
Morgan Stanley said the MSCI Europe index's 20 percent drop from the peak reached in June 2007 looked like enough of a correction, for now.
"With our key market timing indicators also giving us a buy signal and the Fed stepping up the pace of monetary easing, we believe that the risk reward profile for equities is now favorable," Morgan Stanley said in a European equity strategy note.
Financial bookmakers, or spread betters, in London expected Britain's FTSE 100 index to open between 12 and 20 points higher and the German DAX 4 to 20 points higher.
But the French CAC 40 was seen opening between 6 points lower and 11 points higher.
The International Monetary Fund said on Tuesday that a "significant" slowing in the pace of 2008 global economic growth appears inevitable and that restoring world financial markets was going to be a complex and protracted task.
Wednesday's European corporate diary includes French retailer Carrefour's full-year sales update. Eyes will also be on European Central Bank President Jean-Claude Trichet, who is scheduled to speak at an economic policy conference, and at the World Economic Forum which begins in Davos.
On Tuesday, financials led a rally in European shares as the Fed's rate cut turned widespread losses into gains. The FTSEurofirst 300 index ended 1.9 percent up at 1,304.37 points, snapping a five-day losing streak.