LONDON -- Markets were firm on Tuesday as investors remained confident European policymakers will back powerful new measures to battle the continent's debt crisis.
However, the scale of the advance in stock markets witnessed since last Thursday has eased considerably this week amid nagging doubts over Europe's longer-term ability to solve its financial and economic problems.
As so often before in the debt crisis, the risk is that Europe's leaders overpromise and under-deliver.
"Disappointment in the wake of the meetings could be severe if measures are not announced, or if those outlined are not deemed to be sufficiently impressive," said Chris Beauchamp, market analyst at IG Index.
Stocks are considerably higher than where they were last Thursday, when European Central Bank chief Mario Draghi ratcheted up expectations of a new plan.
His comments that the bank is "ready to do what it takes" to save the beleaguered currency, has led many in the markets to believe that the ECB will at the very least ramp up its bond-buying program at this Thursday's monthly policy meeting to keep a lid on Spain's and Italy's borrowing rates.
Draghi's statement of intent came at a particularly important time as Spain's borrowing costs surged to dangerous levels, raising the risk that one of Europe's biggest economies will need a bailout that would strain the euro currency union's finances.
Spain's borrowing rates remain high, certainly in comparison with strong euro economies like Germany. However, they are at manageable rates for now, with the ten-year bond yield down at 6.57 percent. Anything above 7 percent is thought unsustainable in the long-run.
By late morning in Europe, Germany's DAX was up 0.6 percent to 6,812 while France's CAC 40 was up 0.2 percent at 3,328. The FTSE 100 index of leading British companies dipped 0.1 percent to 5,686.
The euro was also solid, trading 0.3 percent higher at $1.2291 despite figures showing a record 17.8 million people were unemployed in the eurozone in June.
U.S. stocks were poised to gain. Both Dow futures and the broader S&P 500 futures were 0.3 percent higher.
Markets aren't just focusing on Europe. The Federal Reserve starts its two-day policy meeting later in the day and investors will be keenly awaiting Wednesday's statement to see if it backs another monetary stimulus.
"Consensus appears to be that the Fed will hold off from making any bold steps in the short term," said Fawad Razaqzada, market strategist at GFT Markets.
Earlier in Asia, Japan's Nikkei 225 stock average rose 0.7 percent to close at 8,695.06 and Hong Kong's Hang Seng gained 1.1 percent to 19,796.81. South Korea's Kospi rose 2.1 percent to 1,881.99 while Australia's S&P/ASX 200 climbed 0.6 percent to 4,269.20.
China's Shanghai Composite dipped 0.3 percent to finish at 2,103.63 as investors appeared unimpressed by a government announcement the day before that it will launch projects to attract private investments in energy, health and other industry sectors in an attempt to reverse an economic slump.
Oil prices remained near $90 a barrel, with benchmark crude for September delivery was up 20 cents to $89.98 a barrel in electronic trading on the New York Mercantile Exchange.