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European Stocks Seen Higher Ahead of Europe Summit

European stocks were expected to open higher on Friday ahead of a crucial summit of European leaders on Sunday.

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Jan Mammey | Stock4B | Getty Images

The FTSE is called 32 points higher, the DAX in Frankfurt is expected to open up by 29 points and the CAC 40 is predicted to be higher by 28 points.

After a tumultuous week for investors concerned that European policymakers might not come up with a plan to solve the European sovereign debt crisis, hopes were raised in US trade on Thursday by reports that European nations could deploy as much as 940 billion euros ($1.3 trillion) in rescue funds to resolve the crisis in the euro zone.

However, France and Germany are still not in agreement over a number of issues including the strength of the European Financial Stability Facility (EFSF)and details relating to the recapitalization of troubled banks.

French President Nicolas Sarkozy and German Chancellor Angela Merkel are due to meet on Saturday night ahead of Sunday's summit in an effort to reach some sort of agreement, but both governments have said a plan should be adopted by next Wednesday at the latest.

Asian stocks dipped overnight on news from Europe that a definitive plan to tackle the crisis within the euro zone is still some way off before edging slightly higher, while the euro managed to cling to overnight gains on Friday.

A slew of late news on Thursday seemed to indicate that no deal will be reached in Brussels at the weekend and EU Commissioner for Economic and Monetary Affairs Olli Rehn said European leaders are now considering "second best" options on how to boost the bailout fund if France and Germany fail to bury their differences.

Meanwhile the European Commission is seriously considering banning sovereign credit ratings for nations seeking bailouts. Michael Barnier, European internal market commissioner said he is studying the matter "very seriously".

Barnier's comments came ahead of a warning by rating agency Standard and Poor's that it would probably downgrade the credit ratings of France, Spain, Ireland, Portugal and Italy if the euro zone slips into a recession, as many believe is likely.

Euro zone finance ministers will meet in Brussels at 1pm UK time on Friday ahead of the summit on Sunday and before all European Union finance chiefs meet on Saturday.

Outgoing European Central Bank head Jean Claude Trichet will deliver a speech in Warsaw on Friday at 8:40 London time, while German Chancellor Angela Merkel is due to give a government declaration on the EU summit at 8:00.

Key economic data on Friday includes a monthly report from the Ministry of Finance in Berlin and UK public sector borrowing figures are available from 8:30.

Corporate releases out of Europe on Friday include French defence firm Safran which will release its third quarter sales figures on Friday and optical equipment producer Essilor will also release third quarter sales. Swedish auto maker Scania will also release its second quarter results on Friday.