Europe Shares To Shrug Off Downgrades, Open Up

European stocks are set to open higher on Wednesday, despite ratings downgrades for Portugal and Greece.

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The UK's FTSE 100 index will gain 32 points at the open to 5,964, while Germany's DAX index could rise 73 points to 7,007, and France's CAC index may open 27 points higher at 4,014, according to BGC Partners.

The euro traded lower against the dollar after Standard & Poor's cut its credit rating of Portugal by one notch to BBB minus and Greece's to BB minus.

A lower yen helped Japanese exporters and sent Asian shares higher on Wednesday on expectations of interest rate hikes from the European Central Bank and possibly the Federal Reserve.

European shares shares closed flat on Tuesday, with the pan-European FTSEurofirst 300 index ending 0.04 percent higher at 1,125.91 points. But banks were led lower by Italy's UBI Banca after a capital hike.

Portugal will remain in focus Wednesday after another ratings downgrade by Standard & Poor's. The agency cut its rating on the country by one notch to just above junk status.

Meanwhile the Bank of Portugal said the country needed substantial new austerity measuresto ensure Portugal meets its budget goals.

Britain's finance minister George Osborne defended his 2011 budget and heavily-contested cuts in parliament Tuesday. He said the country faced a twin challenge of coping with inflation and the European debt crisis.

Investors will increasingly shift their attention to the banking sector, with Irish bank stress test results due Thursday and Spanish savings banks also firmly in focus.

Figures for March retail activity in the euro zone are among macroeconomic data due Wednesday, along with euro zone business and consumer sentiment numbers, also for March.

Spain releases inflation data for March and Portugal releases its February industrial production index and February retail trade figures.