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FTSE, CAC, DAX to Open Higher Despite S&P Warning

European stocks were called to open higher on Wednesday tracking Asia overnight where the euro and shares gained despite a warning from credit rating agency Standard & Poor's (S&P) that it could cut the credit rating of the European Financial Stability Facility (EFSF).

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The FTSE is called 21 points higher, the DAX in Frankfurt is expected to open up by 43 points and the CAC 40 is called higher by 17 points.

S&P placed 15 euro zone countries on credit watch negative on Monday following a meeting between French President Nicolas Sarkozy and Angela Merkel, ahead of a summit of EU leaders in Brussels on Friday.

The rating agency applied more pressure 24 hours later, warning on Tuesday that the credit rating of the EFSF bailout fund now hangs in the balance.

Despite a succession of warning shots by S&P, investors remained optimistic that a definitive plan to tackle the sovereign debt crisis in the euro area would be announced at the end of the week and the euro held steady in Asia overnight.

US Treasury Secretary Timothy Geithner expressed his support for a Franco-German proposal to alter the European Union treaty, imposing stricter budgetary requirements on euro zone nations and codifying sanctions for those who fail to meet them.

Geithner met with German policymakers on Tuesday and will travel to Paris on Wednesday where he is due to meet with Sarkozy and press for urgent reform.

Sarkozy and German Chancellor Angela Merkel will join a number of European leaders in Marseilles on Wednesday for a European conservative party EPP congress.

Geithner will meet with the French President and finance minister Francois Baroin in Paris before travelling to Marseilles for a bi-lateral meeting with newly elected Spanish Prime Minister Mariano Rajoy who is in France for the EPP conference.

However, British Prime Minister David Cameron threatened to veto an EU treaty change if it failed to safeguard British financial interests.

In an interview with the BBC, Cameron said he would use the Brussels summit on Friday to secure safeguards to protect the common market and Britain's financial services sector.

In an interview with the FT on Wednesday, the pro-European British Justice Secretary Ken Clarke expressed concern over the Prime Minister's comments, saying the prime objective for all EU leaders was "how to maintain the financial stability of the Western world" and Friday's summit should not be used to gain concessions for the UK.

Greece's coalition government passed a swathe of austerity measures as part of its 2012 budget on Wednesday, hours after protesters clashed with police outside parliament.

Technocrat Prime Minister Lucas Papademos secured the backing of all three main parties and 258 of Greece's 300 parliamentary members supported the package of spending cuts and tax increases.

Economic releases to watch include French foreign trade data for October at 7:45 am London time followed by UK industrial production figures at 9:30 am and industrial production data from Germany at 11:00 am.

Germany will hold a 5-year bond auction on Wednesday, due to take place at 10:00 UK time.