The euro rose to a 13-month high against the dollar on Wednesday, while European stocks and crude oil futures were broadly steady as investors await economic growth data from the U.S.
The euro rose to $1.3516—its strongest level against the dollar in 13 months—after breaking a key technical resistance level.
"The euro has maintained its momentum this week," said foreign-exchange strategists at UBS UBSN.VX -1.91% . "So far this year, central banks have been willing to maintain a favorable outlook and now the market wishes to see if the Fed will follow suit."
"Even a cautiously optimistic stance may prompt the market to revisit expectations for Fed policy [easing]," they added.
Also in focus and keeping investors from making any bold moves will be the U.S. ADP employment report and the preliminary reading of economic growth during the fourth quarter.
European equity markets trod water ahead of the announcement. Spain's benchmark equity index performed in line with its European peers, despite a disappointing preliminary reading of gross domestic product for the fourth quarter. GDP fell 0.7% from the previous quarter and 1.8% from the same period last year, slightly lower than a reading last week from the country's central bank.
"We forecast [Spanish] GDP to continue to contract through 2013, but 4Q should prove to be the worst for quarterly contraction," said Gizem Kara, European Economist at BNP Paribas BNP.FR -1.84% Corporate and Investment Bank. "This view is supported by the recent developments in leading indicators for growth, which already show some tentative signs of improvement."
Meanwhile, the Spanish region of Catalonia requested more than €9.07 billion ($12.24 billion) from the country's regional liquidity fund late Tuesday.
Nordea AB NDA.SK +1.96% shares rose after the Swedish bank proposed a dividend increase for 2012 and it reported a stronger-than-expected increase in fourth-quarter net profit.
Hennes & Mauritz AB HM-B.SK -2.64% shares fell after its full-year trading update disappointed, with fourth-quarter operating profit lagging consensus.
Eni SpA ENI.MI -4.56% shares slumped after energy engineering services provider Saipem SpA SPM.MI -35.14% said on Tuesday it expects lower earnings in 2012 and 2013 than previously forecast. Eni has a stake of around 43% in Saipem. Saipem shares failed to open in Milan due to excess losses following the profit warning.
The tone in Asia was firm, with Japan's equity markets outperforming as a weaker yen boosted exporters.
U.S. dollar pushed higher against the yen after Japanese Finance Minister Taro Aso said that excessive yen strength is currently in a correction phase.
In the U.S., the Dow Jones Industrial Average closed at its highest level since October 2007. The S&P 500 was lifted by the energy sector, as oil refiner Valero Energy, VLO +12.78% the world's largest independent refiner by processing capacity, reporting robust fourth-quarter earnings. On the economic front, data was mixed. The Conference Board's consumer-confidence index for January fell more than expected, but the S&P/Case-Shiller 20-city home-price index for November rose from a year earlier, in line with expectations.
Other earnings reports also helped underpin sentiment. Shares in Pfizer Inc. PFE +3.10% rose after the drug maker's fourth-quarter results beat analysts' expectations. Eli Lilly LLY +3.19% & Co. gained after the pharmaceutical company topped analysts' earnings and revenue estimates, raised its 2013 profit outlook and announced a $1.5 billion share-repurchase program.
