European stocks gain on expectations of European Central Bank bond buying

European Stocks

European stocks edged higher and the euro hovered near an eight-week high on Thursday on expectations the European Central Bank will unveil new tactics to cut high borrowing costs for indebted euro zone states at a policy meeting later in the day.

The single currency jumped more than 1 cent on Wednesday to a high of $1.2625 after a string of leaks from euro zone officials suggested the ECB would buy short-term debt and not give its own holdings seniority over those of private investors.

But after the leaks, fear of disappointment when the details are made public is keeping a lid on further gains.

"This meeting is absolutely crucial, because expectations are extremely high. If the ECB does not deliver, we will get into another bad patch," said Gilles Moec, senior European economist at Deutsche Bank.

The single currency was trading around $1.2621, up around 0.1 percent and near a two-month high of $1.2638 set on August 31.

The FTSEurofirst 300 index .FTEU3 of top European shares, which ended unchanged on Wednesday despite the reports of the ECB's plans, edged up 0.3 percent to 1,082.53 points in early trading.

In the debt market, safe-haven U.S. Treasury and German government bond prices have dipped ahead of the ECB announcement.

The prospect of future central bank buying is expected to ensure a successful Spanish debt sale later, and debt investors will also be watching France's return to the market as it plans to sell up to 8 billion euros of debt, including a new 15-year bond.

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