TOKYO - European stocks and the British pound rallied Thursday as investors appeared to bet that Britain will vote to remain in the European Union, avoiding the economic uncertainty that experts say a departure would cause.
Britain's FTSE 100 was up 1.6 percent to 6,360 in midday trading while France's CAC 40 rose 2.2 percent to 4,476. Germany's DAX gained 2.3 percent to 10,297.
U.S. shares were set to rise on the open, with Dow and S&P 500 futures both up 0.9 percent.
Investors are awaiting the outcome of the referendum on Britain's membership in the EU. An exit would likely send global shares and European currencies tumbling, analysts say, due to the economic uncertainty it would create in the region. By midday in Europe, bookies had shortened their odds sharply on the "remain" camp winning, with betting company Betfair giving it an 84 percent chance of victory. Trading was thin and likely to remain volatile, however.
The pound was up 1.2 percent to $1.4884, its highest level this year and up from $1.4705 the day before. The dollar rose to 105.80 yen from 104.45 yen and the euro strengthened to $1.1393 from $1.1271.
"The U.K. referendum on EU membership is a material risk to our macroeconomic forecasts," analysts at UniCredit bank wrote in a report to clients. It says that a leave would "lead us to materially revise down our forecasts for growth in the U.K. and the rest of Europe."
Japan's benchmark Nikkei 225 gained 1.1 percent to 16,238.35. Hong Kong's Hang Seng inched up 0.4 percent to 20,868.34, while the Shanghai Composite declined 0.5 percent to 2,891.96. South Korea's Kospi fell 0.3 percent to 1,986.71. Australia's S&P/ASX 200 rose 0.2 percent to 5,280.70.
Benchmark U.S. crude added 21 cents to $49.34 a barrel. It fell 72 cents, or 1.4 percent, to $49.13 a barrel in New York on Wednesday. Brent crude, the benchmark for international oil prices, rose 33 cents to $50.21 a barrel in London.