European stocks, euro dips before EU summit

European stocks rose and the euro dipped against the dollar in early trading on Thursday as investors awaited a crucial EU summit on how to prevent a collapse of the eurozone. Traders were also looking ahead to interest rate decisions from the European Central Bank and Bank of England due on Thursday and coinciding with the start of the two-day EU summit in Brussels. "The markets are undecided as to how to follow the summit and change direction daily simply because there isn't the confidence to hold a position longer than a few hours with such big decisions being made by government heads and ratings agencies at unpredictable intervals," said Jonathan Bristow, a broker at Valbury Capital. London's FTSE 100 index rose 0.42 percent to 5,569.97 points, Frankfurt's DAX 30 climbed 0.94 percent to 6,050.85 points and in Paris the CAC 40 won 0.76 percent to 3,200.15 points. Milan advanced 0.60 percent and Madrid 0.68 percent. "Despite the low volumes, equities are trading firmly in positive territory ahead of key interest rate decisions," said Manoj Ladwa, senior trader at ETX Capital. "While the Bank of England is likely to maintain the status quo and keep interest rates and its asset purchase target unchanged, the game changer could come from the European Central Bank. "Traders are factoring in at least a 25-basis-point cut by the ECB and will be watching closely for any other measures to free up the lending market," he added. Ahead of the ECB decision, the euro dipped to $1.3402 from $1.3413 late in New York on Wednesday. European Union leaders meanwhile scramble Thursday to find a last-minute deal to save the euro at a crucial summit for a debt-laden currency union threatened with break-up. "The situation is serious... the euro can explode and Europe unravel", France's minister for European affairs Jean Leonetti told France's Canal Plus television ahead of the summit. With the entire 27-state EU placed under downgrade watch by international credit rating giant Standard & Poor's, the EU leaders are trying to navigate obstacles to treaty changes required to enforce adherence to national budgetary discipline targets. The biggest obstacles according to high-ranking officials and diplomats are Germany's refusal to embark on anything short of treaty change agreed under the full glare of lengthy, costly and risky public consultation, but that its government considers legally-secure. That and a British refusal to back changes Berlin wants all EU states to agree to, unless it secures important quid pro quos such as ring-fencing the all-important City of London financial services sector from future EU regulation including a proposed tax. The situation is veering from serious towards desperate, 24 hours from a self-imposed EU deadline to save the bloc from imploding -- so much so that US President Barack Obama held urgent telephone talks late on Wednesday with German Chancellor Angela Merkel.