By NBC News and wire services
Stocks are set to rally at Thursday?s opening bell after European Central Bank President Mario Draghi said his bank is ready to do whatever it takes to preserve the single currency.
Speculation had been rising that the ECB, which holds a policy meeting next week, is considering new measures to tackle the euro zone's debt crisis as countries such as Spain and Italy struggle to fund themselves and evidence grows of a region-wide economic slowdown.
"Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough," Draghi told a pre-Olympic games investment conference in London.
In a reference to the high premiums peripheral European nations including Spain are forced to pay to raise funds, Draghi said: "To the extent that the size of the sovereign premia hamper the functioning of the monetary policy transmission channels, they come within our mandate."
Before the speech the problems of Spain and Greece had dominated market attention.
European Commission President Jose Manuel Barroso is due to hold talks with Greek premier Antonis Samaras in Athens later, as a group of international lenders try to decide whether to keep releasing funds from a 130 billion euro bailout package or let the country go bust.
Barroso's visit comes after Citi economists raised the likelihood of Greece leaving the euro zone in the next 12-18 months to 90 percent from a 50-75 percent chance previously.
Investors are also worried about Madrid's ability to keep funding itself from the capital markets in the face a sharp slowdown in its economy and growing calls for help from struggling regional governments.
Spain's 10-year government bond yields edged down to around 7.2 percent, but still remain close to their euro era highs of 7.75 percent and at levels deemed unaffordable in the long term.
Before Draghi's comments, stocks were sagging amid expectations that weak economic data in the U.S. will prompt the Federal Reserve to take action to help the struggling U.S. economy.
These hopes were raised after data on Wednesday showed the biggest drop in single-family home sales in a year in June.
"Despite increasing speculation that the Fed will announce a range of measures including further QE, possibly as early as August, the underlying confidence remains fragile and volatility looks set to continue," Mike McCudden, head of derivatives at Interactive Investor, said.
Reuters contributed to this report.
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