European stock markets were firmer on Wednesday as investors waited to hear more testimony on the US economy from Federal Reserve Chairman Ben Bernanke.
Dealers said that after modest losses Tuesday, markets were simply adjusting back with no real conviction in the absence of a decisive lead.
The International Monetary Fund called meanwhile for the European Central Bank to take on a more active role in resolving the eurozone debt crisis and the setting up of a comprehensive banking union.
The eurozone's problems were highlighted again when Germany sold two-year bonds at negative rates of interest and Chancellor Angela Merkel said she was "optimistic" but could not be certain that the "European project" would work.
A weak start on Wall Street added to the cautious tone but US stocks then picked up, lending some support to Europe.
In mid-afternoon trade, London's FTSE 100 benchmark index of leading shares was up 0.73 percent, Frankfurt's DAX 30 index gained 0.95 percent and in Paris the CAC 40 added 1.36 percent.
Madrid rose 0.55 percent despite news of rising bad loans at its struggling banks while Milan put on 0.43 percent.
The European single currency was lower at $1.2259 from $1.2292 in New York late Tuesday.
In New York, reversed early losses as investors waited on Bernanke's second day of Congressional testimony in the hope he would point to some form of new economic stimulus.
The blue-chip Dow Jones Industrial Average was up 0.23 percent at around 1420 GMT while the tech-rich Nasdaq gained 0.73 percent.
Bernanke gave no clear signal that additional stimulus was on the way in his testimony to Senate lawmakers Tuesday but stocks rallied on hopes that it will materialise.
Gains Tuesday "were based on the belief that the Fed will eventually ... increase credit and liquidity in such a way as to give financial assets a boost. That is a bit of an iffy proposition," said Dick Green at Briefing.com.
June housing data were mixed. Housing starts jumped 6.9 percent from May but building permits, a forward-looking indicator, fell 3.7 percent.
In London, Ishaq Siddiqi, an analyst at ETX Capital trading group said investors there were also hoping for a lead from Bernanke after some disappointment Tuesday with his gloomy appraisal of the economic outlook.
Bernanke conceded that US economic data had been "disappointing" and that a future reduction in unemployment would likely prove "frustratingly slow."
He also forecast slower growth for this year and next and painted a future replete with pitfalls both domestic and from Europe.
In company news, the share price of London-based HSBC fell 0.82 percent after a top executive resigned over the banking giant's failure to control money laundering and terrorist financing, especially in the Americas.
Europe's biggest bank apologised Tuesday for failing to apply anti-laundering rules as US lawmakers accused it of giving Iran, terrorists and drug dealers access to the US financial system.
In Asian trade earlier Wednesday, Tokyo fell 0.32 percent, Hong Kong was down 1.11 percent but Shanghai rose 0.37 percent. Sydney shed 0.42 percent.
Source: AFP Global Edition
