LONDON (Reuters) - European equities and the euro were firmer on Thursday, though investors were reluctant to make big moves ahead of the European leaders' summit, which looks unlikely to agree urgent action to tackle the region's debt crisis.
The two-day meeting is expected to produce a roadmap for fiscal, financial and political union and agree a package of growth-boosting measures, but emergency intervention to ease stresses in the bond market look doubtful.
The market's attention instead is turning to the policy meeting of the European Central Bank next week where a rate cut is seen as a growing possibility.
"We think the European Central Bank is best suited for post-summit fire-fighting at short notice," analysts at Standard Chartered Bank said in a note. "We expect a 25 basis point rate cut at its July 5 meeting."
The euro was up 0.3 percent at $1.2510, recovering from a three-week low of $1.2441 hit earlier this week.
The FTSE Eurofirst 300 <.FTEU3> index of top European shares rose for a third consecutive day, gaining 0.2 percent to 1,002.24 points.
Ahead of the summit, which begins later on Thursday, the market will reveal its appetite for Italian debt at an auction of up to 5.5 billion euros in five- and 10-year bonds. Italy is likely to have to pay dearly to sell the bonds against the current backdrop, even though domestic investors are expected to support demand.
(Reporting by Richard Hubbard; Editing by Will Waterman)
