* FTSEurofirst 300 up 0.3 pct, Euro STOXX 50 up 0.6 pct
* With lower QE3 expectations, focus back on ECB
By Blaise Robinson
PARIS, Aug 31 European stocks rose in morning
trade, halting a sharp three-day drop as investors started to
look beyond Federal Reserve Chairman's policy speech due later
in the day and bet the expected ECB bond buying plan will ease
the debt crisis.
At 0840 GMT, the FTSEurofirst 300 index of top
European shares was up 0.3 percent at 1,081.18 points, after
hitting a four-week low at the open.
The euro zone's blue chip Euro STOXX 50 index
was up 0.6 percent at 2,418.11 points, moving back above a key
level pierced on Thursday, the 23.6 percent Fibonacci
retracement of the market's rally started in late July.
Fed Chairman Ben Bernanke addresses a gathering of world
central bankers in Jackson Hole, Wyoming at 1400 GMT on Friday.
He has used previous such gatherings to signal further policy
But investors' focus was already shifting towards the ECB
meeting on Sept. 6, at which the central bank is expected to
give details on its plan to relaunch its government bond buying
programme to help fight the region's economic crisis.
"The retreat of the last few days shows that expectations
surrounding Jackson Hole have been lowered, and frankly not much
should come out of it. The focus is turning back to Spanish and
Italian bond yields," Agilis Gestion fund manager Arnaud
Friday's gains were led by Southern Europe stocks, with
Spain's IBEX rising 0.8 percent and Italy's FTSE MIB
up 0.9 percent.
Spanish lender BBVA was up 1 percent while Italian
peer Banco Popolare gained 0.9 percent.
European equities sharply rose in the past few weeks after
the ECB signalled it plans to buy Spanish and Italian bonds to
help lower borrowing costs of the two indebted countries, as
well as on expectations of further stimulus measures from the
The rally has recently lost steam, however, as doubts
emerged about the details of the ECB plan and as a slew of
better-than-expected U.S. macro data dampened hopes of a new
round of quantitative easing.
"A number of euro zone countries are reluctant to give the
ECB a blank cheque, which could again limit the central bank's
firepower, so things will remain very tense until Sept. 6,"
Barclays France director Franklin Pichard said.
Pichard says the market could fall another 2.5 percent,
"which would give a nice opportunity to get back into the
Around Europe, UK's FTSE 100 index was up 0.3
percent, Germany's DAX index up 0.4 percent, and
France's CAC 40 up 0.6 percent.