Stocks look to rebound

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NEW YORK (CNNMoney) -- U.S. stocks were poised to bounce back from the previous day's rout, as investors grew hopeful that European officials will make a move to stop the eurozone crisis from getting worse.

Talk of an emergency meeting by the European Central Bank added fuel to that sentiment, along with a decent auction of Italian bonds.

The Dow Jones industrial average (INDU), S&P 500 (SPX) and Nasdaq (COMP) futures were up about 1% ahead of the opening bell Thursday morning. Stock futures indicate the possible direction of the markets when they open at 9:30 a.m. ET.

On Wednesday, yields on 10-year Italian bonds spiked to 7.48%, marking the highest level since the euro launched in 1999. The 7% level sparked fear among investors, sending them fleeing for the exits on worries that yields would continue to march higher -- eventually leading to Italy needing a bailout.

"We have said before that the EU is likely come up with a solution to the European debt crisis only at one minute to midnight. And if Italian yields stay elevated for any period of time, then the politicians will have some very big decisions to make very soon," said Gary Jenkins, an investment strategist with Evolution Securities.

Italy: Too big to fail?

Italy is the world's 8th largest economy and Europe's 4th largest. It also maintains the biggest bond market in Europe. With yields still hovering around that 7% level, sentiment is far from optimistic.

It's a psychological trigger for investors, since 7% was the level that heightened worries about Greece, Ireland and Portugal. All three eventually needed some type of bailout.

"Contagion fears are still very real, and I think we are going to continue to see more liquidation," said Joel Kruger, currency strategist at FXCM. "People continue to find comfort in officials trying to deal with the problem ... but at the end of the day it's been a disaster -- and it's still a disaster."

Because of Wednesday's steep sell-off, any bounce on Thursday is likely to be more of a technical move, rather than in response to improving sentiment, Kruger said.

U.S. stocks sold off sharply from the start of trading Wednesday, as fears that Italy was heading deeper into crisis mode shook investors. The selling intensified in the afternoon, amid reports that European Union officials said they have no plans to rescue Italy.

World markets: European stocks were higher in morning trading. Britain's FTSE 100 (UKX) rose 0.6%, while the DAX (DAX) in Germany climbed 1.5% and France's CAC 40 (CAC40) added 1%.

The Bank of England announced Thursday it will hold its benchmark interest rate steady at 0.5%, and keep its current asset purchase program in place.

Asian markets ended sharply lower, as investors caught up with Italy's spiking bond yields.

"For a while, Asia was blissfully removed from the turmoil that engulfed Europe," wrote HSBC analyst Frederic Neumann in a client note. "As the crisis evolves, however, the risks for Asia are rising." He noted that Europe provides a great deal of lending to Asia, and "if this gets withdrawn precipitously -- the region will feel the pinch."

The Shanghai Composite (SHCOMP) fell 1.8%, the Hang Seng (HSI) in Hong Kong tumbled 5.3% and Japan's Nikkei (N225) dropped 2.9%.

Economy: The number of jobless Americans filing for initial unemployment insurance dropped 10,000 to a seven-month low of 390,000 in the latest week. The expectation was for jobless claims to increase to 400,000 last week, from 397,000 in the previous week.

U.S. import prices fell 0.6% in October, after remaining unchanged in September. Export prices fell 2.1% in October -- the largest monthly decline since December 2008, when export prices fell 2.2%.

The nation's international trade deficit in goods and services fell to $43.1 billion in September, from a revised $44.9 billion in August, after exports increased more than imports. The number was less than the $45.9 billion expected.

Companies: Cisco (CSCO, Fortune 500) posted a fourth straight quarter of declining earnings late Wednesday, but reported more than 12% growth in its video and collaboration divisions. Shares of the networking giant rallied more than 6% in premarket trading.

Green Mountain Coffee Roasters (GMCR) reported earnings that widely missed expectations Wednesday. Shares of the coffee company tumbled more than 20% in early trading Thursday.

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

Oil for December delivery rose $1.33 to $97.07 a barrel.

Gold futures for December delivery fell $20.40 to 1,771.20 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 2.03 from 1.96% late Wednesday.