By Peter Nurse

Investing.com - European stock markets are set to open in positive territory Wednesday, helped by gains in Asia, as market participants expect central bank largesse to mitigate the damage caused by the outbreak of the coronavirus in China.

At 02:15 ET (0715 GMT), the DAX futures contract traded 0.3% higher. France's CAC 40 futures were up 0.2%, while the FTSE 100 futures contract in the U.K. rose 0.2%. Futures on the pan-eurozone index, the Euro Stoxx 50, also climbed 0.2%.

China, the world's second-largest economy, is still struggling to get its manufacturing sector back online after imposing severe travel restrictions to contain a virus that emerged in the central province of Hubei late last year.

"Part of the thinking that is supporting markets is the actions that China takes to support its economy," said Michael McCarthy, chief market strategist at CMC Markets in Sydney.

"Any investor concern around impact on demand globally from the virus will be offset by expectations that global central banks will ride to the rescue."

China's central bank was confident enough to let previous liquidity injections expire without replacement on Wednesday, but Bloomberg reported that the country is preparing a multi-billion-dollar bailout for the airline sector, one variant of which could include loan repayment waivers - something that may indirectly require supportive action from the PBoC. In the U.S., meanwhile, forward dollar rates are now clearly pricing in another interest rate cut from the Federal Reserve this year, despite no obvious hints of action so far from Fed officials.

While stock markets in China have traded lower Wednesday, many neighboring countries have seen gains, helping the overall tone in Europe. In Japan, the Nikkei 225 closed 0.9% higher, while the Hang Seng in Hong Kong was up 0.4% and the KOSPI 50 in South Korea up 0.1%.

In Europe, corporate earnings continued to emerge.

Deutsche Telekom (DE:DTEGn) forecast that growth in its core earnings would slow to 3% this year, below consensus forecasts and down by half from 6% in 2019. Still, the expectation of the $26 billion merger between its T-Mobile U.S. unit and Sprint, creating the third-largest U.S. wireless carrier, will be a positive.

Looking at European economic data, there are U.K. inflation numbers for January, at 04:30 AM ET (0930 GMT). Expectations are for an acceleration in the headline consumer price index to 1.6% from 1.3% in January. This is still below the Bank of England’s 2% target, but could weaken the case for rate cuts in the coming months.