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European Stock Futures Edge Higher; ECB Meeting Looms Large

European stock markets are expected to edge higher at the open Thursday, continuing the recovery from the sharp selloff at the start of the week ahead of the latest policy announcement by the European Central Bank.

At 2 AM ET (0600 GMT), the DAX futures contract in Germany traded 0.1% higher, CAC 40 futures in France climbed 0.4% and the FTSE 100 futures contract in the U.K. rose 0.2%.

This positive start follows on from gains in Asia as well as on Wall Street overnight, rebounding from Monday’s rout on fears the rising Covid cases caused by the highly-transmissible delta variant, starting in Asia and moving into Europe and the U.S., would derail the global economic recovery.

The main focus of investors Thursday will be on the European Central Bank's policy-setting decision, due at 7:45 AM ET (1145 GMT), and the subsequent press conference from President Christine Lagarde.

The central bank recently changed its inflation target, and investors will be looking to see if this changes the course of its monetary policy, particularly after Lagarde earlier this week said the meeting will have “some interesting variations and changes”.

“We think that the ECB will strengthen its forward guidance to signal a longer period of unchanged policy rates and net purchases under the APP [Asset Purchase Program] than markets currently expect,” said Nick Kounis, Head of Financial Markets Research at ABN Amro, in a note.

Meanwhile, the quarterly earnings season continues.

Publicis (PA:PUBP) reported strong second-quarter growth, with the French advertising giant adding that its financials would make a full return to pre-pandemic levels this year.

Swiss perfume maker Givaudan (SIX:GIVN) reported a rise in its net profit and sales in the first half of 2021, while Roche's (SIX:RO) first-half net profit rose as the Swiss drugmaker benefited from demand for Covid-19 tests.

Earnings are also expected from Unilever (NYSE:UL), Valeo (PA:VLOF), ABB (SIX:ABBN), Centrica (OTC:CPYYY) and Mulberry Group (LON:MUL), among others.

Elsewhere, oil prices weakened Thursday, handing back some of Wednesday’s strong gains after a surprise build in U.S. crude stockpiles.

The crude market has been very volatile this week, plunging on Monday on worries over rising Covid cases and an agreement between top producers to add supply, before rebounding over the last two days.

U.S. crude inventories rose by just over 2 million barrels during the week ended July 16, the Energy Information Administration said late Wednesday, snapping a run of eight weeks of declines.

At 2 AM ET, U.S. crude futures traded 0.2% lower at $70.19 a barrel, while the Brent contract fell 0.3% to $72.04. Both contracts gained over 4% on Wednesday.

Additionally, gold futures fell 0.3% to $1,798.40/oz, while EUR/USD traded largely unchanged at 1.1793.

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