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FTSE, DAX, CAC to Open Higher After Rally

European stocks were expected to open higher on Thursday after rallying on Wednesday as investor hopes were raised over European Union plans for a coordinated recapitalization of the region's banks and German Chancellor Angela Merkel confirmed that Germany was ready to recapitalize its banks if necessary.

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The FTSE was called 30 points higher, the DAX in Frankfurt was expected to open up by 21 points and the CAC 40 was predicted to be higher by 15 points.

The STOXX Europe 600 Banking Index recovered from three days of declines on Wednesday, closing up 3.1 percent. Deutsche Bankrose 7.6 percent in Frankfurt, while French bank BNP Paribas gained 8.5 percent in Paris. Shares in battered Franco-Belgian bank Dexia gained 1.3 percent in Brussels on Wednesday, bring their weekly loss to 29 percent.

In Asia overnight, shares rose amid renewed optimism over Europe's bank plans and following better-than-expected data from the US suggesting the world's largest economy could avoid falling back into a recession.

Dominating headlines was the death of Apple co-founder Steve Jobs, one of the world's great entrepreneurs, at the age of 56 after battling pancreatic cancer.

The euro rebounded against the dollar late on Wednesday following news from Germany that it was ready to act on domestic banks, but fell slightly in Asia trading overnight ahead of a highly anticipated European Central Bank monetary policy meeting.

All eyes will be on Frankfurt on Thursday lunchtime, with the ECB meeting due to get underway at 12:45 London time. There has been increasing uncertainty over whether the central bank will decide to maintain interest rates at 1.5 percent, or bow to pressure to cut them as fears over a Greek default persist, piling more pressure on the euro zone's troubled banks.

The Bank of England will announce its monthly interest rate decision ahead of the ECB at 12 and is expected to hold rates at 0.5 percent.

In Berlin German Chancellor Angela Merkel will host an annual meeting with IMF head Christine Lagarde and World Bank president Robert Zoellick on ways to improve the international monetary system at 3pm London time. OECD director general Angel Gurria will also be in attendance, with a press conference scheduled for 4pm.

The Greek sovereign debt crisis is likely to dominate discussions on a day where public sector workers in Greece are expected to strike in further protests over the government's austerity measures.

Key economic data out on Thursday includes UK monthly service sector figures at 9:30 and German manufacturing orders for August at 11:00 UK time.