European stock markets rose but the euro slid on Tuesday on prospects that central banks would announce action to boost economies, while Barclays shares jumped after its chief executive resigned amid a rate rigging scandal.
European markets were helped higher by a cautiously optimistic report on Germany's economy from the International Monetary Fund, and news that Ireland would return to the bond markets on Thursday for the first time since its bailout.
London's benchmark FTSE 100 index climbed 0.41 percent to 5,664.00 points in afternoon trading.
In foreign exchange deals, the euro drifted down to $1.2573 from $1.2582 late on Monday in New York.
"European equity markets are trading moderately higher... managing to hold on to yesterday's solid gains," said ETX Capital trader Markus Huber.
"It will be interesting to see if stocks can keep the current rally going as much seems to be built on expectations that the ECB will lower rates on Thursday due to a flood of rather dismal economic data since the last meeting.
"However judging from the past, a cut in interest rates is anything else than a done deal with the ECB having resisted pressure to do so several times before."
The European Central Bank will announce any new measures at the end of its latest monthly meeting on Thursday, when the Bank of England is widely expected to unveil its own fresh stimulus measures to boost recession-hit Britain.
Official data on Monday showed unemployment across the 17-nation eurozone at a euro-era high level of 11.1 percent while manufacturing purchasing managers indices continued to show activity contracting, though some PMIs exceeded expectations.
World stock markets and the euro leapt last week after European leaders agreed to use emergency funds to recapitalise ailing banks directly.
They also agreed to cobble together $150 billion to boost growth.
On Tuesday meanwhile, all eyes were on British bank Barclays, whose share price rose 3.45 percent to 171.85 pence after chief executive Bob Diamond resigned, caving in to political pressure over a rate rigging scandal which may trigger criminal charges.
"Barclay's shares were initially sold off on the news that the scandal had taken another of the bank's largest scalps with questions on exactly how far and where this would extend," said Andrew Taylor, market strategist at GFT trading group.
Diamond, high profile and highly paid, had faced growing calls to go but it was thought he might save his job and ride out the storm thanks to the resignation of Barclays' chairman Marcus Agius on Monday.
Barclays said that chief operating officer Jerry del Missier would also step down.
The scandal, which might implicate other big international banks, concerns manipulation of the Libor and Euribor interest rates.
These benchmark rates play a key role in global markets, affecting what banks, businesses and individuals pay to borrow money. Libor is a flagship London instrument used throughout the world. Euribor is the eurozone equivalent.
Meanwhile Ireland announced it would return to the bond markets for the first time since September 2010 with a 500 million euro auction of three-month treasury bills.
Ireland was forced to ask the IMF and EU for an 85 billion euro bailout in November 2010 when it could not longer tap bond markets at affordable rates after pledging to bail out its banks.
In the United States, stocks edged lower in opening trade in a shortened session ahead of the July 4th Independence Day holiday.
The Dow Jones Industrial Average dipped 0.13 percent to 12,854.89 points in the first five minutes of trade.
The S&P 500-stock index slipped 0.07 percent to 1,364.60 points, while the tech-rich Nasdaq was flat at 2,950.81.
Source: AFP Global Edition