VIENNA (dpa-AFX) - European stocks may rebound on Wednesday, with bargain hunting in beaten down stocks likely to support markets after two days of heavy losses. Miners could be in focus as copper rebounded from a two-day decline ahead of the U.S. Federal Reserve meeting later in the day.
Asian stock markets are trading mixed, erasing early declines, while the Japanese yen advanced against most of its rivals as speculation that Europe's debt crisis may worsen and signs of slowing global growth boosted demand for safer assets.
With opinion polls suggesting that majority of Greeks oppose the conditions set by the international lenders, Papandreou obtained the cabinet backing on Wednesday to push ahead with the referendum plan and has asked for a confidence vote in the Parliament to obtain support for his policy for the rest of the term. 'We will not implement any programme by force, but only with the consent of the Greek people,' Papandreou said.
The referendum will take place as soon as possible, right after the basics of the bailout deal are formulated, government spokesman Elias Mossialos told reporters after a seven-hour emergency Cabinet meeting.
The statement added that any possibility of snap elections at this critical juncture would risk Greece defaulting on its debts, apparently referring to the crucial confidence vote scheduled to be held on Friday.
According to credit ratings agency Fitch Ratings, the announcement by Papandreou dramatically raises the stakes for Greece and the euro zone as a whole. 'A rejection of the EU-IMF program recently negotiated by the Greek government would increase the risk of a forced and disorderly sovereign default,' Fitch said in a statement.
Meanwhile, French President Nicolas Sarkozy and German Chancellor Angela Merkel are holding an emergency meeting today in Cannes, France before the start of the Group of 20 summit, where they will tell Papandreou that there is no alternative to budget cuts imposed in a bailout plan hammered out last week.
In a radio interview late on Tuesday, Spanish Finance Minister Elena Salgado called on the Greek government to reverse its decision to hold a referendum on the European rescue plan, saying it could have a negative impact on the euro zone's stability.
'We want a 17-member euro, we want Greece in the euro,' Salgado said after some European politicians said a Greek rejection of an EU bailout package in a referendum could force Greece out of the euro.
In economic releases, unemployment from Germany and final Purchasing Managers' survey results from Eurozone are the major reports due in the European session.
In corporate news, German stock exchange operator Deutsche Börse announced that the order book turnover on Xetra and the Xetra Frankfurt specialist trading in October stood at €109.5 billion, up 9.6 percent from a year earlier.
Mining giant Rio Tinto said it has signed a deal with Japanese construction and mining equipment maker Komatsu to buy at least 150 driver-less trucks over the next four years.
Standard Chartered Plc noted in its interim management statement that it continued to perform well in the third quarter of 2011 with income momentum across a broad spread of products and geographies despite recent macroeconomic events.
European stocks were battered for a second day in a row on Tuesday, as Greek Prime Minister George Papandreou stunned the markets by calling for a referendum on Greece's participation in a sovereign debt rescue fund, potentially derailing the agreement reached by European leaders last week.
The Euro Stoxx 50 index of euro zone blue chippers plunged 5.3 percent and the Stoxx Europe 50 index, which includes some major U.K. companies, lost 2.9 percent, while around Europe, the U.K.'s FTSE 100, Switzerland's SMI, the German DAX and France's CAC 40 fell between 2.2 percent and 5.4 percent.
On Wall Street, stocks tumbled overnight spooked by news of Greek referendum on the reform plans and data showing slowing U.S. manufacturing growth. Profit taking also contributed to the sell-off, with traders showing some risk aversion ahead of the outcome of the Federal Reserve's monetary policy meeting and Friday's monthly employment report. The Dow fell 2.5 percent, the Nasdaq lost 2.9 percent and the S&P 500 plummeted 2.8 percent.
Investors are speculating that the Fed could launch another round of quantitative easing and purchase mortgages instead of Treasuries to put pressure on mortgage rates.
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© 2011 AFX News
