European shares joined a global rally in stocks on Tuesday as expectations rose that major central banks will take more policy action to support the world economy, after factory data showed the negative impact of the euro zone debt crisis.
However, the euro held steady just under $1.26, pressured by reports that Finland and the Netherlands opposed a plan for Europe's new permanent bailout fund to buy government bonds in the secondary market.
But market players are mostly focused on the July 5 meeting of the European Central Bank, when it is expected to cut its main interest rate by 25 basis points to 0.75 percent.
"If the ECB offers loud support this Thursday with a rate cut and a signal of more to follow in the face of lower growth and inflation, there may be enough fuel for a summer rally in stock markets," said Bill O'Neill, EMEA Chief Investment Officer for Merrill Lynch Wealth Management.
After gains on Wall Street and across Asia, MSCI's world equity index was up 0.2 percent at 314.03. The FTSE Eurofirst 300 index so gained 0.2 percent to 1037.26 points, adding to a 4.2 percent jump since Friday.
A surprise rise in China's services sector for June also buoyed commodity prices, with Brent crude oil up around $1 a barrel and copper hitting six-week highs of $7,790 a tonne, while gold gained on hopes of more monetary easing.
