(RTTNews) - After a sharp rally in the previous session, European stocks are poised for further upside on Wednesday, with a firm trend in the Asian markets and data showing stronger recovery in the United States underpinning sentiment. Also, fears about unrest in Egypt eased after Egyptian President Hosni Mubarak said he would step down in September. U.S. President Barack Obama, meanwhile, indicated that the orderly transition of power must begin straight away.
Asian stocks climbed higher on Wednesday, led by a 1.8 percent gain in Japan's Nikkei index, as signs of growth in the U.S. and Europe and some encouraging earnings reports increased investor appetite for riskier assets. The Chinese stock markets are shut for a week beginning today for the Lunar New Year holiday. The dollar is losing ground against the euro as investors move into other risk assets like equities and industrial metals.
Crude prices are trading weak for a second day in New York, weighed by API data showing increase in inventory levels, while the futures on the Dow index, which rose sharply overnight to close past the 12,000 mark for the first time since June 19,2008, are unchanged.
In economic news, the President of the European Central Bank, Jean-Claude Trichet, reiterated his call for stronger economic governance within the euro area, saying the single currency bloc must operate as a "quasi-fiscal federation."
Investors await producer price inflation data from the eurozone and construction PMI figure from the U.K. later in the day for clues on the pace of domestic economic activity. The eurozone producer price index is seen rising by 0.7 percent on a monthly basis and by 5.2 percent on a yearly basis, while the U.K.'s CIPS construction PMI for January is expected to rise to 49.5 from 49.1 in December.
The major European markets closed Tuesday's session notably higher, as traders relished positive earnings, higher commodity prices and solid economic data points. The French CAC 40 Index and the German DAX Index closed at multi-year highs, with the former rising 1.68 percent and the latter by 1.51 percent, while the U.K. FTSE 100 ended the day up 1.62 percent.
On Wall Street, stocks closed sharply higher on Tuesday, with the strongest U.S. manufacturing activity data since 2004 triggering some hectic buying across the board. The Dow rose 1.2 percent to finish above the 12,000 mark, while the Nasdaq climbed 1.9 percent and the S&P 500 added 1.7 percent.
