European shares rallied today as short-term lending rates eased ahead of two key central bank meetings that are expected to yield no change in interest rates.
Earlier this morning, the FTSEurofirst 300 index of top European shares was up 0.7 per cent at 1,533.55 points.
A sharp rally in Japanese stocks late in Tokyo added to the positive tone early in Europe.
The European Central Bank and the Bank of England release their decisions on monetary policy later, and analysts expect a squeeze in credit markets and high volatility to prompt both the ECB and BoE to hold fire.
But equity investors will be eager to hear any words of reassurance from ECB President Jean-Claude Trichet on the bank's commitment to keep money markets liquid.
London's FTSE 100 index rose 0.7 per cent, while Frankfurt's DAX gained 0.6 per cent, and Paris's CAC 40 rose 0.7 per cent. Commodity shares were the top gainers in Europe.
The FTSEurofirst is up over 3 per cent for the year, but is still down by more than 6 per cent from its highs for 2007 in mid-July before the crisis in US subprime lending triggered a rise in volatility and lending rates.