Europe's stock markets pushed higher Thursday as investors eagerly awaited a widely-expected stimulus announcement from the European Central Bank.
The euro meanwhile held close to an eight-month low as dealers bet on fresh stimulus from the ECB, which announces its interest rate call at 1245 GMT.
"The expectation is high that the ECB will deliver monetary stimulus," said VTB Capital economist Neil MacKinnon.
Nearing midday trade, London stocks added 0.3 percent, while Frankfurt rose 0.9 percent and Paris won 1.3 percent.
Policymakers are widely expected to step up their vast stimulus programme to counter weak inflation and boost economic growth.
At the bank's last monetary policy meeting of the year, analysts said president Mario Draghi will likely announce a beefing up of its bond purchase programme and a possible cut in key interest rates, which are already at historic lows.
"All eyes are on the European Central Bank ... as it prepares to announce its latest policy response to the ongoing depressed levels of inflation," added Oanda analyst Craig Erlam.
Speculation that the bank will further loosen its grip on monetary policy continues to press on the euro and has revived he possibility of it hitting parity with the dollar for the first time since 2002.
In foreign exchange deals on Thursday the euro changed hands at $1.0558, having struck $1.0551 on Wednesday --which was the lowest level since mid-April.
"Today could be a pivotal day in the story of the single currency (with) an aggressive move by the ECB to ease policy, especially with the Fed on course to tighten policy in the next couple of weeks," said analyst James Hughes at trading firm GKFX.
"If we are to get an aggressive move we are expecting big falls on the euro, and especially in euro/dollar.
"A move to parity has been the suggestion for the last few weeks."
In a bid to bring eurozone inflation back up to levels conducive to healthy economic growth, the ECB has already unleashed an unprecedented series of easing measures.
It has slashed borrowing costs, made vast amounts of cheap loans available to banks and most recently embarked on a programme to buy around 60 billion euros of sovereign bonds each month until at least September 2016.
But area-wide inflation is still stubbornly low, standing at just 0.1 percent in November, far below the ECB's target of just under 2.0 percent.
The greenback had also rallied on Wednesday after Federal Reserve boss Janet Yellen said she considered the US economy strong enough to withstand an interest rate rise.
Her comments virtually assure a US rate hike at its next policy meeting this month following mostly strong data.
Meanwhile in commodity markets, world oil prices rebounded Thursday on the eve of OPEC output meeting in Vienna.
New York crude had tumbled Wednesday under $40 per barrel for the first time since August after another sharp rise in US stockpiles and production, suggesting demand remains sluggish.
- Key figures around 1130 GMT -
London - FTSE 100: UP 0.3 percent at 6,438 points
Frankfurt - DAX 30: UP 0.9 percent at 11,288
Paris - CAC 40: UP 1.3 percent at 4,967
EURO STOXX 50: UP 0.7 percent at 3,300
Tokyo - Nikkei 225: UP 0.01 percent at 19,939.90 (close)
New York - Dow: DOWN 0.9 percent at 17,729.68 (close)
Euro/dollar: DOWN to $1.0558 from $1.0619 in late US trade on Wednesday
Dollar/yen: UP to 123.45 yen from 123.21 yen