Stock markets appeared relatively calm, amid signs that Italy and Greece are taking steps to deal with debt and political uncertainty, with U.S. stock futures pointing towards a stronger open.
Dow futures gained 86 points, or 0.7 per cent, to 11,818, while S&P 500 futures rose 13.7 points, or 1.1 per cent, to 1,239.30.
France's CAC 40 rose 0.7 per cent, while Germany's DAX gained 0.9 per cent. Britain's FTSE 100 was little changed at 5,457.04 points.
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Fears that Italy, the third-largest economy in Europe, could default on its $2.6-trillion (U.S.) debt had sent stock markets plunging Wednesday as Italy's key borrowing rate spiked far above the 7 per cent threshold.
On Thursday, Italy easily sold 5-billion euros worth of 12-month bonds at 6.087 per cent, amid reports that the European Central Bank was buying the debt. That compares with 3.57 per cent in the last such auction last month.
Many market observers expect that a technocratic government led by economist Mario Monti, a former European competition commissioner, will succeed Premier Silvio Berlusconi, who said he would step down earlier this week. Italy is under pressure to prove it can push through the reforms so that it can carry and repay its debts. Its president has pledged reforms will be passed soon, likely by Saturday, after which Mr. Berlusconi will resign.
Italy's leading business newspaper summed up the growing sentiment with an enormous bold-faced headline: "Hurry Up." The Financial Times went with: "Stocks Volatile as Italy Stays In Focus." (Der Spiegel's was: "German Politicians Shed Few Tears for Berlusconi," and it points out that "the Italian prime minister has a long track record of offending the Germans.")
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German Bund futures erased earlier gains to fall 43 ticks. The premium investors demand in holding 10-year Italian government bonds rather than German counterparts fell after hitting a record 576 basis points earlier.
The euro traded 0.4 per cent higher at $1.3585, rising off its lowest levels in a month.
Greece is also in the process of choosing a new prime minister, with former European Central Bank vice president Lucas Papademos considered the front-runner. His main task will be to lead a coalition government in securing continued bailout funding and a new $177-billion rescue package for Greece from Europe and the International Monetary Fund.
Benchmark crude for December delivery was up $1.53 at $97.27 a barrel in electronic trading on the New York Mercantile Exchange.
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Gold lost $20.20, falling to $1,771.40 an ounce.
The Canadian dollar traded at 98.08 U.S. cents.