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FTSE, CAC, DAX to Open Higher, Economic Data Brings Some Relief

European stocks were called to open higher on Wednesday tracking Asia where shares and the euro rose overnight following positive economic data out of the US and Germany.

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The FTSE is called 24 points higher, the DAX in Frankfurt is expected to up by 43 points and the CAC 40 is called higher by 22 points.

German think tank Ifo released its business sentiment index on Tuesday showing a sharp rise in German corporate sentiment, highlighting the resilience of Europe's largest economy in the midst of the sovereign debt crisis.

In the US, Commerce Department data showed housing starts hit an 18 month high, surging 9.3 percent to 685,000.

Stocks in Europe closed the day higher on Tuesday following the news and an auction of 3 and 6 month Spanish treasury bills which saw yields fall on short term bonds.

However, Greek borrowing costs rose on 3-month bills after an auction of $1.7 billion of debt.

Eurogroup chairman Jean Claude Juncker said late on Tuesday that Europe has no alternative but to reduce its debt levels, but he added the euro currency is stable at the moment and not in crisis.

Renowned economist Nouriel Roubini told the FT on Tuesday that the "euro zone has been in denial of the fact that some of its member states are insolvent" and "unable to survive and grow in a monetary union." Juncker conceded that Europe is not currently giving the impression that it is doing all it can to resolve the crisis in the periphery.

German concerns over the role of the ECB in the crisis were voiced on Tuesday when Andreas Dombret of the Bundesbank said that the debt crisis would not be solved by the ECB printing money or rescue funds being increased.

Dombret told Dow Jones that ECB financing of government debt "solves no problems but rather creates new ones" and it "(endangers) the most important foundation of a stable currency: the independence of a central bank that targets price stability."

Credit rating agency Moody's warned on Tuesday that Britain's triple-A rating is under threat by the continuing crisis in the euro zone and it faces "formidable and rising challenges" that could derail the British government's attempts to balance its budget.

All eyes will be on the European Central Bank on Wednesday when it offers 3-year loans to troubled European banks for the first time ever. The ECB offer of unlimited three-year loans is expected to attract strong demand after ECB president Mario Draghi encouraged banks to take central bank credit provisions in an announcement last week.

The tender is expected to get underway at around 10:15am London time.

In Spain, King Juan Carlos will attend the swearing in ceremony of newly elected Prime Minister Mariano Rajoy in Madrid and the Russian parliament reconvenes for the first time since elections took place on December 4. Russian President Dmitry Medvedev and Prime Minister Vladimir Putin's United Russia party will return to parliament with a reduced majority.

Key economic data includes final third quarter GDP figures from Italy at 9:00am UK time.