European stocks were called to open higher on Thursday despite falls in Asia overnight amid rising concerns that European Union leaders might not reach a deal on how to tackle the debt crisis at a summit in Brussels on Friday.
The FTSE is called 30 points higher, the DAX in Frankfurt is expected to open 57 points higher and the CAC 40 is called up by 33 points.
German Chancellor Angela Merkel and French President Nicolas Sarkozy presented their plans to amend the European Union treaty in a letter to European Council President Herman Van Rompuy on Wednesday.
The Franco-German plan seeks to impose tighter budgetary requirements on euro zone countries and codify sanctions for those who fail to meet them.
However, there are growing concerns that the summit of European Union leaders on Friday will fail to produce a clear and credible plan to tackle the sovereign debt crisis engulfing the euro zone.
A German official told a pre-summit briefing on Wednesday that he was "pessimistic" over the chances of reaching a deal, adding: "A lot of protagonists still have not understood how serious the situation is."
US President Barack Obama called German Chancellor Angela Merkel on Wednesday to discuss the upcoming summit and the two leaders agreed on the need for a lasting and credible solution on European debt.
French Finance Minister Francois Baroin said Franco-German policymakers were determined to reach a "powerful" deal and they would not leave Friday's summit until one is reached.
Wednesday brought a third downgrade warning in as many days from credit rating agency Standard & Poor's (S&P), this time warning it could cut the credit ratings of the European Union and some of the euro zone's biggest banks.
A cut to the EU's credit rating is likely to result in higher borrowing costs for the union of 27 member states and the latest S&P announcement follows Monday's warning that 15 euro zone member states have been placed on credit watch negative and news on Tuesday that S&P could cut the credit rating of the European Financial Stability Facility bailout fund.
The European Central Bank is expected to cut interest ratesto a record low of 1 percent and announce fresh aid for struggling euro zone banks when the Governing Council meets in Frankfurt on Thursday.
The bank will announce a decision on rates at 12:45pm UK time, followed by a press conference at 1:30pm.
European Union leaders will arrive in Brussels on Thursday ahead of the Friday meeting and British Prime Minister David Cameron, Merkel, and Sarkozy and new Italian Prime Minister Mario Monti are expected to attend an informal dinner on Thursday night.
Incoming Spanish Prime Minister Mariano Rajoy will meet his center right European counterparts in Marseilles on Thursday where he is likely to assure them of his government's commitment to austerity measures and voice Spanish support for closer fiscal unity within the euro zone.
US Treasury Secretary Timothy Geithner will visit Milan on Thursday for a meeting with Monti before returning to Washington later in the day.
Geithner has spent the week meeting with European leaders ahead of Friday's summit to press for urgent reform to resolve the sovereign debt crisis.
The Bank of England will also announce its monthly interest rate decision at 12:00pm on Thursday.