Potentially weak numbers from Nokia and a Spanish bond auction, however, could test the recovery in investor risk appetite that has seen implied volatility on euro zone equities drop to its lowest level in nearly four months
Financial spreadbetters expected London's FTSE 100 to open up around 10-14 points, or 0.2 percent, Frankfurt's DAX to gain 35-40 points, or 0.6 percent, and Paris' CAC 40 to rise 16-24 points, or 0.7 percent. That should push the pan-European FTSEurofirst 300 out of July's narrow trading range of 1,024 to 1,054 points, propelling it to levels not seen since early May.
Overnight market gains in Asia and in the United States - where the
S&P 500 touched its highest level since early May - are likely to support
the relatively positive tone.
The technology sector - which gained strongly the previous session on the
back of forecast-beating results from the world's largest chip equipment maker
ASML and rival Intel - could get a further boost from IBM raising its full-year earnings target overnight.
To date, 64 percent of European large and mid-cap companies have beaten or
met second-quarter earnings forecasts, with profits up on average 3.4 percent
year-on-year, according to Thomson Reuters Starmine data.
A possible fly in the ointment could be Nokia, with investorsbracing for the Finnish mobile phone maker to report weak sales of the key Lumia phones in its second-quarter results later on Thursday. Ahead of the report, short interest in Nokia has surged to an all-time high at over 16 percent of lendable stock, according to Markit data, while the share price itself has sank to 16-year lows.
Investors' optimism could also be tested by an auction of up to 3 billion euros of mid-term Spanish debt. The sovereign is expected to see its borrowing costs rise further, potentially putting the spotlight back on to the euro zone crisis.
German lawmakers vote on Berlin's contribution to a euro zone aid package for Spanish banks during the day, although they are widely expected to give the
green light.
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