Wall Street, meanwhile, looked set to open higher on a holiday-shortened trading day, following another record high for the S&P 500. European markets have been buoyed by the nomination of Lagarde to replace Mario Draghi at the ECB. A former French finance minister, Lagarde has backed the stimulus efforts of the current ECB chief, Mario Draghi, who was credited with defusing the eurozone's debt crisis. After last weekend's G-20 meeting, Lagarde said that trade turbulence was the primary risk for the global economy.
"Providing strength to the markets 'dovish' tone is the nomination of Christine Lagarde to take the reins of the ECB later this year with many believing that she is willing to provide further market stimulus," said Dean Popplewell, Vice President of Market Analysis at OANDA.
Germany's DAX added 0.6% to 12,607 while the CAC 40 in Paris also climbed 0.6%, to 5,611. Elsewhere in Europe, Britain's FTSE 100 picked up 0.7% to 7,616 after a closely-watched report said the country's economy contracted in June at its steepest rate since the immediate aftermath of the country's vote three years ago to leave the European Union. That report further weighed on the pound and that helps boost stocks as it could help exports and the earnings of multinational companies that are listed on the exchange.
U.S. shares looked set for gains on a shortened trading day ahead of the Independence Day holiday, with the future contract for the S&P 500 up 0.2% at 2,985. The future for the Dow Jones Industrial Average also edged 0.2% higher, to 26,842.
"With the G-20 Summit in the rear-view mirror, we look around the markets and revert to what are the clear drivers — liquidity, and the view of further aggressive central bank easing and increased money supply," Chris Weston of Pepperstone said in a commentary.
Markets were less upbeat in Asia as the euphoria from President Donald Trump's truce with China's Xi Jinping on trade faded. The Shanghai Composite index sank 0.9% to 3,015.20 while Japan's Nikkei 225 index lost 0.5% to 21,638.16. The Hang Seng in Hong Kong declined 0.1% to 28,855.14, while South Korea's Kospi lost 1.2% to 2,096.02. Australia's S&P ASX 200 advanced 0.5% to 6,685.50 and the Sensex in India edged 0.2% higher to 39,910.53. Shares fell in Taiwan and most Southeast Asian markets.
Traders are waiting to see what will come from the latest truce in the U.S.-China trade war. They're also looking ahead to a key government jobs report due out Friday, among other potential market-moving developments in the next few weeks.
Trump began ramping up tariffs on Chinese exports a year ago, prompting Beijing to follow suit. The two sides are now imposing punitive tariffs on billions of dollars' worth of each other's products. Trump and Xi agreed over the weekend to resume trade talks. The United States also agreed not to impose more tariffs on the world's second-largest economy, and to allow sales of technology to Huawei Technologies.
The detente was good news for markets, but tariffs in place have already hurt global economic growth, and investors see that the two sides still face the same differences that caused talks to break down earlier.
"The post-G20 optimism remained short-lived," Ipek Ozkardeskaya of London Capital Group said in a commentary, "as White House trade adviser Navarro reminded investors that agreeing on a trade deal between the U.S. and China will certainly take time, although the countries moved in the right direction at the latest G-20 summit."
Chinese Premier Li Keqiang said Tuesday that China plans to lift foreign ownership limits in securities, futures and life insurance by 2020, a year earlier than originally scheduled. So far, though, Beijing's efforts to soothe trade tensions by accelerating certain markets have not addressed specific complaints from the Trump administration over Chinese industrial policies and the huge, longstanding Chinese trade surplus.
ENERGY: In commodities trading, benchmark crude oil gained 46 cents to $56.71 per barrel in electronic trading on the New York Mercantile Exchange. It fell $2.84 to settle at $56.25 a barrel overnight. Brent crude, the international standard, picked up 76 cents to $63.16 per barrel. It lost $2.66 to close at $62.40 a barrel on Tuesday.
CURRENCIES: The dollar fell to 107.72 Japanese yen from 107.90 yen on Tuesday. The euro edged up to $1.1291 from $1.1286.