Euro Shares Set to Rise as Commodities Recover

European stocks looked set to continue the strong performance of the previous session at the open Thursday as commodities regained strength and boosted the major indexes.

Sharon Lorimer

European shares hit a 26-month closing high on Wednesday, boosted by banking and insurance shares, on expectations that financials will perform well.

Yields on German bonds, normally seen as a safe haven by investors, nevertheless rose on Wednesday as deepening uncertainty over how to stem the euro zone crisis hit even Europe's strongest economy.

International Monetary Fund chief Dominique Strauss-Kahn said the situation in Europe remains troubling and that the future is more uncertain than ever.

Investors will turn their attention to the Bank of England's interest rate decision on Thursday, a week after the European Central Bank decided to leave rates on hold at 1 percent.

The UK monetary policy committee decided at its November meeting to maintain rates at 0.5 percent and maintain the size of the quantitative easing Asset Purchase Programme at 200 billion pounds.

A Reuters survey of 64 economists showed none expect the Bank of England to extend the scheme on Thursday, and interest rates are expected to remain at 0.5 percent until next October at least.

Separately, the European Central Bank publishes its semi-annual Financial Stability Report on Thursday.

German inflation data for November and manufacturing turnover figures for October are due out on Thursday morning, as well as UK trade data and third quarter GDP number from Portugal.