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Europe Set for Gains, Spotlight on Italy, ECB and Yen

European stocks are expected to recover some of the losses made earlier this week at the open as investors focus on the European Central Bank's reactionto the recent sharp rise in Italian and Spanish bond yields.

Traders sit in front of their screens at the stock exchange in Frankfurt/Munich, western Germany.
Martin Oeser | AFP | Getty Images
Traders sit in front of their screens at the stock exchange in Frankfurt/Munich, western Germany.

The FTSE is called higher by 30 points, the DAX by 68 points and the CAC 40 up by 38 points.

After the close of the market on Wednesday, Italian Prime Minister Silvio Berlusconi went in front of both houses of Italy’s parliament and vowed to see out his 5-year term and focus his government on boosting Italy’s growth rates.

Ahead of that speech, European Commission President Jose-Manuel Barroso had called on Europe’s member states to ratify the new crisis-fighting measures agreed at last month's EU heads of state meeting/

He warned that “the tensions in bond markets reflect a growing concern among investors about the systemic capacity of the euro area to respond to the evolving crisis".

European Central Bank President Jean-Claude Trichet’s monthly press conference will be a key focus for investors looking for clues on his response to the selloff of Italian and Spanish debt and push him on whether the ECB will directly intervene to avoid a damaging crisis.

Spain hopes to raise between 2.5 billion euros and 3.5 billion euros in ($3.6 billion -$5 billion) in a bond auction on Thursday which will test investors' appetitite for the country's debt.

The yen will also be a major factor in Thursday’s session after the Japanese currency fell sharply in Asian trade after intervention from the Bank of Japan overnight, a move that boosted the Nikkei.

Investors will also have to deal with one of the busiest days of the quarter for European earnings with Deutsche Telekom, Munich Re, Telecom Italia, ING Groep, Swiss Re, Aviva, Lloyds Banking Group and Rio Tinto all due to report.