European markets rose Thursday ahead of the policy meeting of the European Central Bank amid hopes that Spain would soon seek a bailout to help reduce its borrowing costs.

The French CAC 40 index was up 0.29 percent or 9.88 points to 3415.90.  Shares of Renault SA advanced 2.31 percent and those of Safran SA climbed 1.75 percent.

London’s FTSE 100 index rose 0.45 percent or 26.27 points to 5852.08. Shares of Wolseley Plc gained 1.70 percent and those of Xstrata Plc were up 0.94 percent.

The German DAX 30 index advanced 0.71 percent or 51.98 points to 7374.06. Shares of ThyssenKrupp AG rose 1.56 percent and shares of Daimler AG gained 0.93 percent.

Spain's IBEX 35 was up 0.89 percent or 69.80 points to 7896.50. Shares of Abengoa SA rose 4.29 percent and those of Acciona SA advanced 1.30 percent.

Investors are focusing on the monthly policy meeting of the ECB to be held at Ljubljana Thursday. Market players hope that the ECB will keep its interest rate at 0.75 percent.

“Meanwhile, Mario Draghi will likely face questions on Greece, Spain and the banking union – we would expect him to stick to the script while probably praising the Spanish government for its efforts and recent announcements with regards the 2013 budget and, even more importantly, structural reforms, implicitly suggesting that the country is already ticking the boxes of an ECCL-type bailout, and thus OMT activation,”

The ECB's recent promise to buy the peripheral government bonds without limit has certainly helped boost the market sentiment. Market participants expect that Spain will ask for a bailout under the enhanced conditions credit line and this would trigger the bond-purchasing operation by the ECB.

The ten-year Spanish and Italian bond yields are in close proximity of 5.75 percent and 5 percent respectively. This may be a sign that the market sees a good chance of progress in the rescue effort.