--European stocks to start up; conference call in focus
--Investors hope for euro-zone solution from G-7 finance ministers
--FTSE 100 remains closed; Egan-Jones cuts U.K.'s rating

By ANDREA TRYPHONIDES LONDON--European stocks are expected to start positively as investors eagerly await a meeting between G-7 finance ministers who will discuss events in the euro zone and perhaps offer a solution to the current turbulence, particularly in the Spanish bank sector.
The talks between G-7 finance ministers and central bankers are expected to focus on Spain, which has been at the center of euro-zone concerns of late.
Equity markets rose in Europe Monday while the euro eked out gains against the dollar and this is set to continue on Tuesday. But Credit Agricole Corporate & Investment Bank warned, "The respite looks temporary unless followed by concrete measures out of the euro zone to stem the crisis."
Andrew Taylor, market strategist at GFT, has called Germany's DAX to start up 32 points, or 0.5%, at 6010 and France's CAC-40 up 20, or 0.7%, at 2974. Commenting on the teleconference call, Mr. Taylor said, "We can expect markets to continue with a positive tone in early trade thanks to speculation of a proposed grand plan in the works to save Europe. Unfortunately, these rumors seem to occur once a week and so until there is official confirmation, I am happy to call the rally just better selling opportunities."
The FTSE 100 index remains closed for a public holiday but futures markets show the index down 25 points at 5235, said Mr. Taylor.
Ratings firm Egan-Jones on Monday downgraded the U.K.'s rating to AA- from AA, citing concerns about the country's debt and banking system. The firm also put the outlook on the U.K.'s rating at "negative."
The ratings company noted mounting concerns over the risk of financial contagion throughout Europe.
"The major problems for the U.K. is that Europe's banking crisis does not appear to be abating as evidenced by the miserable results of most [euro-zone] banks," the ratings firm wrote in a report.
Another ratings firm, Standard & Poor's Ratings Services, said Monday there was at least a one-in-three chance Greece would leave the euro zone following its national elections later this month. The Greece ASE index re-opens Tuesday after being closed to observe Whit Monday.
On Monday, U.S. stocks suffered a choppy session after a surprise decline in U.S. factory orders. The Dow Jones Industrial Average retreated 0.1% to 12101.46. Meanwhile, the Standard & Poor's 500-stock index inched up less than 0.1% to 1278.18 and the Nasdaq Composite rose 0.5% to 2760.01.
Asian markets edged forward Tuesday. The relative calm comes after a storm of bad news--most notably weakening manufacturing activity in China and poor employment data from the U.S.--that prompted a heavy sell-off by investors.
The relative calm in markets allowed the euro to regain ground. By 0605 GMT, the single currency was at $1.2525 from $1.2502 late Monday in New York. Undoubtedly, the euro is also being helped by expectations G-7 ministers will have a fruitful conference call later Tuesday.
There was also a slight moderation in the yen's strength against the dollar, as the greenback climbed to Y78.40 from Y78.35.
The softening in the yen helped Japan's Nikkei, which was up 0.9% Tuesday. Hong Kong's Hang Seng Index climbed 1.0%, Korea's Kospi gained 1.2%, while the China Shanghai Composite increased 0.3%.
Earlier, Australia's central bank made a 0.25 percentage point cut to interest rates. This was in line with expectations, though some economists were hoping for a larger reduction.
Write to Andrea Tryphonides at [email protected]