Stocks headed for a third day of gains

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NEW YORK (CNNMoney) -- Wall Street was headed for a third day of gains Wednesday following a rally in European stocks on renewed talk about the possibility of a Eurobond and after Moody's downgraded two French banks.

Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were all higher ahead of the opening bell. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

Futures had been lower after Moody's downgraded French banks Credit Agricole SA and Societe Generale over their exposure to Greek debt.

But futures turned higher on talk coming out of the Europe that the European Commission was close to unveiling a proposal for a new common eurozone bond.

The idea of a Eurobond has been talked about lately as a possible solution to ease the borrowing costs for the weaker members of the 17 euro area nations. But it's faced some opposition from more credit-worthy nations, which would face higher borrowing costs.

Europe's debt crisis: 5 things you need to know

"If Europe does decide to go that route, that certainly would help high debt nations finance themselves and that should help," said Peter Cardillo, chief market economist Rockwell Global Capital.

The news sent European markets surging. Britain's FTSE (UKX) 100 added 1.7%, the DAX (DAX) in Germany surged 2.8% and France's CAC 40 (CAC40) added 2.1%.

U.S. stocks followed world markets slightly higher Tuesday after French banks BNP Paribas and Societe General debunked rumors that they were having trouble gaining access to funding.

Lately, trading sessions have seen a string of major market moves predicated on rumors swirling out of Europe.

Economy: The Producer Price Index, a measure of wholesale inflation, was unchanged in August, in line with expectations. The so-called core PPI -- which strips out volatile food and energy prices -- ticked up 0.1%, after increasing 0.4% the previous month.

Retail sales were flat in August, following a 0.3% rise the previous month. Economists were expecting that sales rose 0.2% in August. Excluding sales of volatile autos, sales edged up 0.1% last month.

The July reading on business inventories, due from the government later in the morning, is likely to show an increase of 0.5%.

World markets: Asian markets ended mixed. The Shanghai Composite (SHCOMP) gained 0.6% and the Hang Seng in Hong Kong (HSI) rose 0.1%, while Japan's Nikkei (N225) shaved 1.1%.

Companies: Shares of cereal maker Ralcorp (RAH) sank 10% after ConAgra (CAG, Fortune 500) reiterated its $94 a share takeover offer but said it would withdraw that bid if it wasn't accepted by Sept. 19.

Currencies and commodities: The dollar slipped against the euro, the British pound, and the Japanese yen.

Oil for October delivery slipped 75 cents to $89.48 a barrel.

Gold futures for December delivery rose 30 cents to $1,830.40 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury dipped, pushing the yield up to 2.01%.

The 10-year yield broke through its long-term floor of 2% for the first time in history last month.