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Paris - European stocks rose Wednesday as investors shrugged off Slovakia's rejection of Europe's bailout fund and focused on hopes that a possible workaround solution would be found before a summit of EU leaders next week.
The advance has come even though Slovakia's parliament rejected a bill overnight that would have strengthened the powers of the regional rescue fund to help bail out strapped economies in the eurozone.
Despite the rejection, markets are confident that the measures will pass after Slovakia's outgoing prime minister and her main opponent say they will work to try to get the bill through Parliament.
"The Slovak rejection of the EFSF is not worrying the financial markets with approval likely ahead of the key EU Leaders summit on 23rd October," Bank of Tokyo-Mitsubishi UFJ head of global currency research Derek Halpenny said.
The 16 other countries that use the euro have already signed off on the bill, but the measure requires unanimous support.
There are ways around Slovakia's opposition, but the move temporarily sets back efforts to address Europe's debt jam, which has been the most important issue for financial markets for months.
German Chancellor Angela Merkel said Wednesday she remains optimistic that eurozone countries will pass an expanded European bailout fund despite its rejection in Slovakia.
That optimism was echoed in stock markets, with the CAC-40 in France up 1.4% to 3 197.5. The FTSE 100 index of leading British shares rose 0.5% at 5 421 while Germany's DAX was 1.4% higher at 5 955.
The euro has also advanced strongly on hopes that Slovakia's "no" vote will soon be overturned. It was trading 0.9 percent higher at $1.3777.
Investors are also anticipating a speech by EU Commission president Jose Manuel Barroso later Wednesday where he is expected to unveil proposals on how to make European banks fit enough to sustain the worsening debt crisis on Wednesday.
"We caution that the Commission has no power to make legislation..... though it is worth hearing the Barroso proposals and the response they generate," said Elsa Lignos, an analyst at RBC Capital Markets.
Barroso said Tuesday that he would unveil several initiatives that should contribute to a "comprehensive response" to the eurozone's debt troubles.
Barroso said a plan to recapitalize European banks would be part of those proposals.
Fears that Greece and other highly indebted countries may default on their debts have hit banks in recent months.
Barroso did not give details on the recapitalization plans.
Wall Street appeared headed for a higher open as well, with Dow futures up 0.4% to 11 377 and S&P 500 futures 0.4% higher at 1 193.80.
Earlier in Asia, Japan's Nikkei 225 index dropped 0.4% to close at 8 738.90. But Hong Kong's Hang Seng rose 1% to 18 329.46 and South Korea's Kospi added 0.8% to 1 809.50. Benchmarks in Singapore, India, Indonesia and mainland China also swung into positive territory.
Oil prices tracked stocks higher, with the benchmark New York rate up 54 cents at $86.35 a barrel.
