By Nina Bains & Michele Maatouk European stocks posted slight gains, the euro nudged higher against the dollar and yields on the debt of fiscally frail euro-zone nations were stable Friday, as investors grew hopeful that Spain will ask for a bailout. Spain was in focus following a report that the European Commission and the Spanish government are working towards structural reforms that could meet the demands of its international lenders. According to the Financial Times, the talks are aimed at ensuring measures required for a bailout are in place before the government formally requests help. The reforms are expected to be revealed next Thursday. Spanish Prime Minister Mariano Rajoy's reluctance to ask for a sovereign bailout has been a drag on sentiment recently, so any signs of progress were always going to be welcomed by the market. Meanwhile, the International Monetary Fund moved to reassure markets that Spain's banking-sector recapitalization needs are lower than feared. At 1115 GMT, the benchmark Stoxx 600 index was up 0.2% at 275.17. Germany's DAX was 0.8% higher at 7447.44, while France's CAC-40 was flat at 3511.60. The U.K.'s FTSE 100 index was 0.1% lower at 5850.71, following the release of public sector net borrowing figures for August. The reading registered the highest amount borrowed in the month of August since records began in 1993. December gilts slipped slightly after the release falling to 119.18, but recovered lost ground to settle at 119.36, down 17 ticks on the day. Sterling was fetching $1.6257 from $1.6217. Friday sees the expiration of stock and index futures and options, which could cause some volatility. Outside Europe's core, Italy's FTSE Mib was up 0.7% at 15,944.39, Spain's benchmark IBEX-35 index up 0.6% at 8072.80. Greece's ASE Composite index rocketed higher, up 1.7% at 776.98, as European Union and Greek finance ministry officials said that budget cut talks were progressing well. Still, Italian growth forecasts acted as reminder of how fragile the situation is in the euro zone. The Italian government Thursday lowered its economic projections for 2013 but moved to dispel worries by insisting the country will present a balanced budget next year. Southern European debt markets were steady. At the same time, Spain's 10-year government bond yield was down two basis points at 5.73%, while Italy's corresponding bond yield was four basis points higher at 5.02%, according to Tradeweb. In currency markets, the euro was higher against the dollar, fetching $1.3009 from $1.2968 late Thursday in New York. The dollar was at Y78.20 from Y78.23. Although the tone was positive overall, concerns about global growth remained on investors' minds after a series of weak manufacturing data from China and the euro zone Thursday. November Nymex crude oil futures were up $0.80 at $93.22 per barrel and the November Brent oil contract was up $0.63 at $110.66. Spot gold was up $5.80 at $1,774.20. The December Bund contract was down 28 ticks at 139.93. There is no data of note due Friday. Ahead of the open of U.S. equity markets, the Dow Jones Industrial Average front month futures contract was up 0.3% at 13,558.00 and the S&P 500 front month futures contract was also 0.3% higher at 1457.70. Write to Michele Maatouk at michele.maatouk@dowjones.com

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