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Europe Stocks to Open Lower but Hopes on Euro Rise

European stocks were expected to open lower on Thursday after ending the day up on Wednesday led by miners and car makers. The Stoxx Europe 600 Index clawed back early losses, gaining 1.7 percent at the close.

A broker works as his control screen shows a graph of activity on the French Stock Exchange in Paris.
AP
A broker works as his control screen shows a graph of activity on the French Stock Exchange in Paris.

The FTSE is called 32 points lower, the DAX in Frankfurt is expected to open down by 24 points and the CAC 40 is predicted to be lower by 7 points.

Gains in Asia overnight suggested investors are hopeful that action is now being taken to resolve the sovereign debt crisis in Europe. Strong words on Wednesday from European Commission President Jose Manuel Barroso in a speech to the European Parliament, stressed the need to urgently recapitalize the region's banks.

Incoming European Central Bank head Mario Draghi warned Italy that the need for reform is urgent and the nation cannot expect to be bailed out by other euro zone members.

There was some welcome news when shares in French lender BNP Paribas rose 5.7 percent after Societe Generaleupgraded the bank's stock to buy from hold, adding that it believes BNP Paribas is sufficiently capitalized and is unlikely to need state aid.

The euro fell by 0.1 percent against the dollar to $1.3783 before rising slightly to $1.3808 and against the yen, the common currency dipped 0.3 percent before rising slightly.

European Council President Herman van Rompuy will meet with Greek Prime Minister George Papandreou on Thursday after the Greek government admitted that it is likely to miss its deficit reduction targets this year and next.

In Slovakia, the opposition pledged that the extension to the European Financial Stability Facility (EFSF)will be approved by Friday, after parliament voted against the measure on Tuesday and the government fell.

The Women's Forum for the Economy and Society begins in Deauville on Tuesday with IMF chief Christine Lagarde expected to attend together with a number of high profile business leaders.

French retail giant Carrefour issued a fresh profit warning on Thursday after it managed a 0.3 percent gain in third quarter sales. The No.1 European retailer announced that it expected profit for the year to fall by between 15 and 20 percent, after previously predicting a 15 percent drop.

Swiss pharmaceutical company Roche announced a 13 percent fall in 9 month sales early on Thursday due mainly to the strength of the Swiss franc.

Miner Rio Tinto will release its third quarter output figures and British retailer investment manager Ashmore is due to announce first quarter trade information.

Key economic data to watch includes German CPI data for September at 7:00 UK time and UK August trade figures at 9:30.