In early trade, the Stoxx Europe 600 advanced 0.3%. The euro was trading around $1.0624 to the dollar, slightly lower on the day after the buck sold off sharply Tuesday, burdened by weak U.S. retail data as well as the International Monetary Fund trimming its growth expectations for the U.S. and upgrading its forecasts for the eurozone.
Later in the session, and a month into the launch of its asset purchase program, the ECB will make its latest monetary policy announcement.
No changes to its key rates are expected, but strategists at Mizuho said President Mario Draghi could announce a broadening of the range of bonds eligible for purchase under quantitative easing, and may also announce greater flexibility on the bond maturities that can be bought.
"[Credit] curves are flattening as the stock of eligible assets is shrinking, making the program harder to execute -- something that isn't in the ECB's best interests," said Peter Chatwell, a senior rates strategist at Mizuho.
The ECB has pledged to buy 60 billion euros ($64 billion) of bonds a month until September 2016, but not buy bonds with a yield below the ECB's deposit rate of -0.2%. A ferocious compression of yields in recent weeks though means that swaths of sovereign bonds already trade below that level, making them ineligible for purchase.
Mr. Draghi is also expected to face questions over Greece.
Greece's Syriza-led government has been locked in negotiations with its international creditors since coming to power in late January, with progress slow.
The country needs a deal by this summer to secure billions of euros in bailout aid to avoid defaulting on its debts and potentially exiting the euro.
Greece's finance minister, Yanis Varoufakis, is to meet U.S. President Barack Obama in Washington on Thursday, according to a senior finance minister.
Already on Tuesday, Greek government bonds sold off sharply, while stocks fell.
Early Wednesday, the yield on Greece's July 2017 bonds was marginally lower at around 23%. The yield on the country's 10-year debt was around 0.1 percentage point higher at around 11.8%.
Yields rise as bond prices fall and a so-called inverted curve, where shorter-dated debt yields more than longer dated, indicates that investors see a heightened chance of default.
Back in equity markets, merger and acquisition activity continued to dominate headlines across Europe more broadly.
Early Wednesday, Nokia Oyj said that it had sealed an agreement to buy rival telecommunications-equipment firm Alcatel-Lucent SA in an all-stock deal that values the French company at EUR15.6 billion.
Alcatel-Lucent shares surged by double-digit percentages Tuesday but were back down sharply on Wednesday. Shares in Nokia took a beating ahead of the confirmation of the deal and were higher in early trade Wednesday.
In commodity markets Wednesday, Brent crude was 1.7% higher on the day at $60.84 per barrel. Gold was broadly flat at $1,193.20 per troy ounce.
Write to Josie Cox at josie.cox@wsj.com
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(END) Dow Jones Newswires
April 15, 2015 04:10 ET (08:10 GMT)
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