Before the bell: Critical EU summit to begin

Is the European Union (EU) a house united or is it headed for a fall?

European stocks are holding steady since yesterday but U.S. index futures and Asian shares fell as the world awaits the outcome of a European Central Bank (ECB) meeting that transpires today to kickoff the two-day EU summit. The great hope, beyond expected rate cuts, is that the ECB will introduce further measures to boost the economy.

European banks, stricken by capitalization fears, fell despite the anticipated ECB rate cut. And word has it the 17 Eurozone leaders will agree to give the International Monetary Fund €150 billion (US$200 billion) in bilateral loans to use as a firewall in the debt crisis. There's hope the 10 other non-Eurozone EU nations will chip in an additional €50 billion ($67 billion).

The Stoxx Europe 600 Index was 0.6 per cent higher at 242.94. London's FTSE 100 was 0.5 per cent higher at 5575.65, Frankfurt's DAX gained 1.0 per cent to 6055.20 and Paris's CAC-40 increased 0.9 per cent to 3203.11.

The euro presently sits at US$1.3400, the British pound rose to $1,5719 as the U.S. dollar fell to 77.46 yen and to 0.9231 Swiss francs.

Uncertainty about the outcome of the EU summit impacted Asian stocks in Japan though mainland China shares rose with the Shanghai Composite Index gaining 0.1 per cent to 2,329.82. The Franco-German fiscal challenge that will be put before the entire 27-nation EU is a dicey proposition with no guarantees of success. Moreover, a deteriorating Eurozone crisis is seen as a significant threat to Britain's economic recovery.

Meanwhile, U.S. futures on the Down Jones Industrial Average fell 17 points to 12,197 and Standard & Poor's 500 Index futures fell 3.2 points to 1,260.80. The Nasdaq 100 futures also slipped downward by 2.25 points to 2,319.25. This is coupled with rising doubts over whether or not U.S. equities can continue to benefit from previously released U.S. economic data that was better than expected.

However, fears of a double-dip recession are on the wane stateside as Treasury yields rose nearly a month ahead of an expected U.S. auction of $32 billion in three-year notes on Dec. 12 and $21 billion in 10-year debt on Dec. 13. Washington may also sell $13 billion in 30-year bonds on Dec. 14 and $12 billion in five-year Treasury Inflation Protected Securities on Dec. 15.