PARIS: European stock markets edged higher on Thursday as investors speculated about a possible rate move by the European Central Bank to kick-start sluggish growth and inflation in the single currency area.
The euro was under pressure as forex players also bet on a possible cut in interest rates at the ECB's regular policy-setting meeting in Frankfurt.
But, with the stock market gains in Asia capped earlier, traders said the upside in Europe could be limited, too.
At around midday, Frankfurt's blue-chip DAX 30 index was steady, while the CAC 40 in Paris was 0.4 percent higher and London's FTSE was also in positive territory.
Markets were "caught between optimism about further central bank easing, and concern that any new measures to help boost demand are likely to be limited at best," said Michael Hewson, analyst at CMC Markets.
Konstantinos Anthis, head of research at the brokerage ADSS, said that a slew of new economic data "does not bode well" for the ECB.
"The main question on everyone's mind is will (ECB President) Mario Draghi be pushed to cut interest rates immediately," Anthis said.
Germany's widely-watched Ifo business confidence index plunged in July and in the eurozone as a whole, business growth slowed to its lowest level in three months in July due to a worrying slowdown in German manufacturing.
"The ECB meeting has just got a lot more interesting, with markets pricing in a high probability of a rate cut despite a previously widely held belief that it won't come until September," said Craig Erlam, analyst at Oanda.
London Capital Group analyst Ipek Ozkardeskaya said the euro "is under a decent selling pressure as downside risks prevail ahead of the ECB decision" and Draghi's post-meeting press conference.
Anthis at ADSS suggested that the pressure on the single currency would not abate "if the ECB doesn't act today, as the most likely takeaway will be that an easier policy and potentially more quantitative easing are coming."
The ECB has already cut its key interest rates to historic lows and pumped unprecedented volumes of cash into the financial system via the so-called QE bond-buying scheme.
Earlier in Asia, gains in stock markets were tempered by the emergence of doubts over a US-Chinese trade meeting next week and the announcement of massive job cuts at beleaguered Japanese carmaker Nissan.
Nissan announced after the market close that it would shed 12,500 jobs, following a 95-percent net profit plunge in the first quarter to $59 million.
Hong Kong finished 0.3 percent higher, Shanghai gained 0.5 percent and Tokyo closed up 0.2 percent. Singapore rose 0.4 percent while Seoul was down by the same amount.
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