European stock markets rose sharply Wednesday and Wall Street was expected to rise on the open, helped by strong earnings from French bank Credit Agricole SA and a surprise increase in British employment levels.

The euro, meanwhile, was pushing back up towards 15-month dollar highs while the pound slid over a cent against the dollar after the Bank of England appeared to welcome the fall in the currency as a means of rebalancing the British economy away from domestic consumption towards export-led growth. A lower pound would make British exports cheaper.

Germany's DAX was up 83.55 points, or 1.5 percent, 5,696.23 while France's CAC-40 was 51.56 points, or 1.4 percent, higher at 3,837.15.

Investors in Europe were cheered by better than expected third quarter results from Credit Agricole. Its shares were up nearly 6 percent, making it the top riser on the CAC-40. Other banks rose in its slipstream, including Societe Generale SA.

Meanwhile, the FTSE 100 index of leading British shares was up 69.82 points, or 1.3 percent, at 5,300.37 _ a close above 5,311 would be its best since September 2008.

Sentiment in Britain was buoyed by figures showing employment increased in the three months to September for the first rise since May 2008 _ a rise in the available work force, as graduates joined the labor market, pushed unemployment up, however.

"The markets are seeing the data in a positive light and will bolster hopes that the UK economy, which has been lagging behind the major economies in terms of economic growth, might be stabilizing and slowly moving out of recession," said Neil Mackinnon, global macro strategist at VTB Capital in London.

The latest quarterly economic projections from the Bank of England did little to alter the underlying stock market sentiment. Though the central bank raised its growth forecasts, it did not alter the prevailing view that interest rates in Britain will remain at very low levels for a while to come.

Governor Mervyn King indicated that the Bank of England was not closing the door on a further injection of money into the British economy

There was much more of an impact on the pound, which fell sharply after King said a drop in the currency would help support Britain's export-led recovery. Following his comment, the pound fell from a high of $1.6770 to $1.6640.

"Clearly King favours a weak pound," said Geoffrey Yu, an analyst at UBS.

Stocks around the world have enjoyed a strong first half to the week after finance ministers from the Group of 20 rich and developing countries indicated that borrowing costs would remain low for a while yet.

As a result, the Dow Jones industrial average has struck new highs for 2009.

Analysts said much could well depend on whether the S&P 500 _ widely considered to be a better barometer of investor appetite than the Dow _ can breach its October high of 1,097. Continued...