European and US stocks gained in intraday trading yesterday on the eve of an EU summit that markets hoped would deliver firm action to contain the eurozone debt crisis amid debt tensions over Spain.

German Chancellor Angela Merkel insisted in a speech to lawmakers that there were “no quick, no easy” solutions to Europe’s debt crisis.

A day before EU leaders gather in Brussels amid expectations they can come up with solutions to the crisis, Merkel warned there was no “magic formula” and called for the problem to be tackled at its roots.

With investors cautious before the two-day summit, London’s benchmark FTSE 100 index of leading shares rose 0.84 per cent to stand at 5,492.77 points in afternoon trade.

Frankfurt’s DAX 30 gained 0.51 per cent to 6,167.73 points and in Paris the CAC 40 climbed 0.79 per cent to 3,036.36. Madrid’s IBEX 35 index advanced 0.58 per cent to 6,566.50 points.

In foreign exchange deals, the euro eased to $1.2473 from $1.2495 late on Tuesday in New York.

“The foreign exchange market appears directionless at present and the moves in euro-dollar in recent days have been modest,” said Derek Halpenny, European head of global markets research at the The Bank of Tokyo-Mitsubishi UFJ.

“In part, this is due to the fact that risk aversion, so prevalent in May, has subsided somewhat in June due firstly to the Greek election result, which eased fears over imminent Greek (eurozone) exit, and due also to the hope being placed in EU leaders that measures will be taken to resolve the crisis.

“Equity markets are modestly higher... as this hope persists,” he added.

In early New York trading, the Dow Jones Industrial Average was up by 0.33 per cent at 12,576.37 points, while the S&P 500 index advanced by 0.48 per cent to 1,326.34 and the tech-rich Nasdaq rose by 0.46 per cent to 2,867.10.

EU leaders were to meet in Brussels for two days of talks from today to consider proposals to give EU authorities more power over national budgets and to centralise banking supervision.

But many economists were unconvinced that they would be able to overcome their differences and hammer out a coherent deal.

In company news, a huge planned merger between commodities giants Glencore and Xstrata was thrown into doubt yesterday after the sovereign wealth fund of Qatar, Xstrata’s second-largest shareholder, opposed the deal’s terms.

Qatar Holdings (QH) said in a statement to the London Stock Exchange that “whilst it sees merit in a combination of the two companies, it is seeking improved merger terms.” Both Switzerland-based Glencore and Xstrata are listed in London.

In February the two formalised a highly anticipated deal to create a raw materials juggernaut with a market capitalisation of $90 billion (€72 billion).

Glencore is offering 2.8 of its shares per Xstrata share.

But QH has now said that “an exchange ratio of 3.25 new Glencore shares for every one existing Xstrata share would provide a more appropriate distribution of benefits of the merger whilst properly recognising the intrinsic stand-alone value of Xstrata.”

Glencore shares were down 2.25 per cent at 295.90 pence and Xstrata gained 0.11 per cent to 787.0 pence in London deals.