European Stocks Set for Lower Open

European shares look set to open slightly lower Wednesday on mixed Asian markets and lower oil.

Sharon Lorimer

According to BGC Partners, the UK's FTSE 100 index will open 13 points lower at 5,962, while Germany's DAX index will fall 5 points to 7,160, and France's CAC index could start the day 6 points lower at 4,010.

Oil prices are trending lower but a lot of volatility is expected as the world's largest oil producer, Saudi Arabia, prepares for "Day of Rage" protestson Friday.

Analysts from Goldman Sachs and Bank of America Merrill Lynch raised their forecasts for oil in the current and coming quarter as the unrest in the Middle East and North Africa persists. And the Energy Information Administration predicts that US crude prices will average a record $102 a barrel in 2011, up from its previous forecast of $93.

European shares ended higher on Tuesday, with the FTSEurofirst 300 index closing up by 0.3 percent.

The Bank of England Monetary starts its two-day meeting Wednesday, with a decision on interest rates due Thursday.

The bank's Monetary Policy Committee held rates at 0.5 percent at its last meeting, although minutes from that meeting showed support for a rate rise was growing.

A third Bank of England policymakers voted in favor of higher rates in February and others would consider a hike if the recovery of the economy resumed, the minutes showed.

The key argument for keeping UK interest rates on hold is the weakness of the economy. Britain suffered a shock contraction in the final quarter of last year.

The Bank may be particularly wary of raising rates just weeks before the government's March 23 Budget.

Axel Weber, outgoing Governor of Germany's Bundesbank told CNBC Tuesday there was a genuine risk that inflation would stay higher than was advisable or tolerable for some period of time. his comments come after ECB President Jean-Claude Trichet hinted an ECB rate hike could come as early as April.

UK January trade data and Germany's January industrial production index are among macroeconomic data on the agenda Wednesday.

In Ireland, parliament meets for the first time since the February 25 election.

Irish voters propelled the center-right Fine Gael party into power on last month on a wave of voter anger over the country's economic meltdown.