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Europe Stocks Seen Higher; Sarkozy, Merkel to Meet Greeks

European stocks were called to open higher on Wednesday, rebounding slightly from sharp declines on Tuesday when news that Greece would hold a referendum on the euro zone debt deal agreed last week shocked investors, leading to the biggest one day loss in over a month in Europe.

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Jan Mammey | Stock4B | Getty Images

The FTSE is called 21 points higher, the DAX in Frankfurt is expected to open up by 36 points and the CAC 40 is called higher by 27 points.

The euro hit near three week lows in Asian trading as investors fled riskier assets and reports came through early on Wednesday that the Greek cabinet had backed Prime Minister George Papandreou's call for a referendum. News of the Greek vote has undone all of the gains made last week in a relief rally following the announcement of a deal reached in Europe to resolve the sovereign debt crisis.

French President Nicolas Sarkozy admitted that the world had been taken by surprise by Greece and the decision by Prime Minister Papandreou, but he insisted that despite the vote announcement, Greece must continue with the bailout plan.

The French President is due to meet with German Chancellor Angela Merkel and George Papandreou on Wednesday afternoon in Cannes, ahead of the G20 summit which begins on Thursday.

German Finance Minister Wolfgang Schaeuble told the Financial Times German edition that the euro zone will support Greece staying in the common currency bloc if the country continues with the conditions of the bailout deal and he expressed confidence that the Greek people will support their government's austerity reforms.

In a radio interview late on Tuesday, Spanish Finance Minister Elena Salgado called on the Greek government to reverse the decision to hold a vote on bailout conditions, saying it could have a negative impact on the stability of the euro zone.

The U.S. Federal Reserve wraps up a two-day policy meeting on Wednesday, but analysts do not expect a major policy shift. Wednesday is likely to be dominated once again by the shock vote announcement and the meeting between Greek Prime Minister Papandreou and his French and German counterparts.

Greek opposition leader Antonis Samaras is due to meet his New Democracy MPs on Wednesday, with reports suggesting that he could ask them to resign in order to force a snap election.

French finance minister Francois Fillon will meet with the leaders of France's leading banks on Wednesday to discuss the agreements reached at last week's euro zone summit. Specifically, Fillon and Bank of France head Christian Noyer will focus on the decision that banks and private holders of Greek debt will take a 50 percent haircut on their bond holdings.

In Cannes, the L20 group of leading business chiefs will meet ahead of the G20 summit in the southern French town, while anti globalization protestors will hold an alternative summit in Nice.

German firm MAN SE said on Wednesday that it expects 'market volatility' to continue in the commercial vehicle sector after revenue results came in lower than the previous quarter. UK gold mining firm Randgold Resources recorded a profit of $122.9 million in the third quarter, a significant rise on the same quarter a year ago.

A raft of manufacturing data will be released on Wednesday with France and Germany reporting at 8:50 and 8:55 respectively.