Stocks, euro rise before summit, ECB decision

Asian shares and the euro gained on Wednesday on hopes that the threat of mass credit rating downgrades will pressure European leaders to come up with a convincing framework for resolving the euro zone debt crisis at a crucial summit later this week.
European shares were expected to resume their brisk 1-1/2 week rally, interrupted on Tuesday, and S&P 500 futures pointed to a firmer start on Wall Street.
Standard & Poor's, which on Monday told 15 euro zone member nations that it may cut their debt ratings, fired a second shot less than 24 hours later, threatening on Tuesday to cut the credit rating of Europe's financial rescue fund.
The rating action weighed on stocks initially, but sentiment improved after the Financial Times reported that European leaders would discuss boosting the firepower of the euro zone bailout fund, a move crucial to effectively containing the contagion of the crisis to bond markets.
"People are more optimistic that the news out of the Dec. 9 meeting would be more upbeat, so it's a bit of a reaction to that," said Guy Stear, head of research with Societe Generale in Hong Kong, adding that the markets were in a technical bounce from yesterday's moves.
MSCI's broadest index of Asia Pacific shares outside Japan rose 1%, while the Nikkei stock average added 1.7%.
Financial spreadbetters predicted the FTSE 100 to open as much as 0.4% higher, the DAX to gain as much as 0.7% and France's CAC-40 to rise as much as 0.5%.
The euro inched up 0.2% to $1.3420, off its one-week low near $1.3330 touched on Tuesday, with guarded optimism ahead of the European Union summit on Friday and the European Central Bank's policy meeting on Thursday.
Market players expect the central bank to announce a rate cut as well as expanded liquidity measures to ease strains in the banking system.
In the latest evidence of the euro zone debt crisis affecting the global economy, a Reuters poll on Wednesday showed Japan's manufacturers turned pessimistic for the first time in six months, boding ill for the fragile recovery from a devastating earthquake and tsunami in March.
Annual export growth rate in China, a big exporter to Europe, slowed in November from October and it will face a "severe export situation" in 2012, officials said. China is due to release its November trade data on Saturday.
Guarded optimism helped firm Asian credit markets, with spreads on the iTraxx Asia ex-Japan investment grade index narrowing marginally, while risk sensitive oil and copper eked out gains.
Brent crude steadied above $110 and U.S. crude nudged up 0.2%. Copper rose 0.7% to $7,886.50 a tonne and gold also edged up 0.1%.
"A lot of short positions are being taken off before the event but no one is really putting on risk. Eyes will remain on headlines," said a Singapore-based trader with an Asian bank