European stocks turned positive Wednesday after an unsteady start that followed the arranged rescue of Spain's Banco Popular SA (BPESY) by the European Central Bank as investors prepare for U.K. elections and Senate testimony from former FBI Director James Comey later this week.

Banco Santander SA  (SAN) , Spain's biggest lender, will pay €1 for Banco Popular and raise around €7 billion in fresh capital after agreeing to take on the balance sheet of Popular, which was deemed "failing or likely to fail" by the ECB and the Single Resolution Board. The combined group will have 21 million customers in Spain and Portugal and a vice-like grip on commercial retail banking in Europe's fourth-largest economy.

The region-wide Stoxx Europe 600 index was marked 0.21% higher in the opening hour of trading while benchmarks in Britain, France and Italy notched similar percentage increases. Popular shares were suspended from trading by Spanish regulators while Santander shares initially fell more than 2 but pared that loss into a 0.3% gain by 09:15 BST to change hands at €5.79 each in Madrid.

The market's overall tone, however, was cautious even ahead of the Popular rescue, which was announced by the ECB's Single Resolution Board at 07:00 BST, as investors braced for Thursday's slate of major events, including a U.K. general elections that appears nearly too-close-to-call but will undoubtedly set the tone for the country's exit negotiations from the European Union.

Currency markets have also been active ahead of Thursday's meeting of the ECB's Governing Council in Frankfurt, during which President Mario Draghi will unveil fresh growth and inflation forecasts for this year and next. Investors have been adding to cautious bets that Draghi will use the updated forecasts to indicate an improving inflation picture in the single currency area and signal a retreat from the Bank's ulta-loose monetary policies.

U.K. Government bonds yields fell sharply Wednesday, taking benchmark 10-year borrowing costs below 1% for the first time since October, as investors piled-in to safe-haven assets ahead of Thursday's general election.

The pound was also under pressure, falling 0.1% against a weakened U.S. dollar to trade at 1.2896 as the final polls ahead of tomorrow's vote show a firm but narrowing leading for Prime Minister Theresa May's Conservative Party that may be strong enough to deliver an election win but perhaps not decisive enough for her to remain its leader.

Here comes Comey on Thursday.
Here comes Comey on Thursday.

Benchmark 10-year bond yields, known as Gilts, were marked 2 basis points lower at 0.98%, meaning investors are snapping up the paper, despite the paltry returns, in order to neturalise risks in other markets.

Overnight in Asia, stocks managed to claw their way into positive territory, with the region-wide MSCI Asia ex-Japan index slipping 0.12% in cautious trading. A slightly firmer yen, however, driven by safe-haven flows against the dollar, once again kept a lid on export-focused stocks and led Japan's Nikkei 225 to its second-consecutive session decline, albeit only by a few points.

The U.S. dollar, however, remains in a range that has kept prices close to their lowest levels since early November ahead of a scheduled appearance by former FBI director James Comey, who was fired by Trump earlier this year, in front of a Senate Intelligence Committee.

The dollar has given back gains for a number of weeks now, as investors trim expectations of the myriad policy ambitions of President Donald Trump and fret over weaker-than-expected economic data, to trade at 96.66 against a basket its global peers.

Comey's testimony, however, could accelerate concerns that the President may face pressure to resign - or possible face impeachment - if Comey reveals that Trump persuaded him to drop an investigation into his former security advisor, Michael Flynn, as part a wider probe into Russia's alleged meddling in the 2016 election.

Global oil prices drifted lower in overnight Asia trading, but prices were broadly supported by the ongoing political and economic boycott of Qatar by four of its Gulf region neighbours over accusations that it has been too soft on extremists.

Data from the American Petroleum Institute, published Tuesday, showed that commercial crude stockpiles fell 8.7 million in the week ending May 26. If the figures are confirmed by the Energy Information Administration at 15:00 BST, investors may speculate that demand over the summer driving season will begin eating into the glut of U.S. supply that has kept downward pressure on prices since the beginning of the year.

West Texas Intermediate crude futures for July delivery were marked 0.68% at $47.86 while Brent crude contracts for the same month, the global benchmark, were seen 0.7% lower at $49.77.

U.S. equity futures, however, indicate a positive open on Wall Street later today, with the Dow Jones Industrial Average poised to gain around 10 points, or 0.05%, at the opening bell, with similar percentage gains anticipated for both the S&P 500 and the Nasdaq.

What's Hot

Apple (AAPL - Get Report) still in focus after mixed responses on Wall Street to its WWDC. 

Tesla's (TSLA - Get Report) CEO Elon Musk said on Tuesday evening the company wants to build three more battery plants in the U.S.

FANG stocks -- an acronym for Facebook (FB - Get Report) , Amazon (AMZN - Get Report) , Netflix (NFLX - Get Report) and Google (Alphabet) (GOOGL - Get Report) are set to open near records.

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