Will central banks act? Markets say yes.

Signs that Germany and European Union officials are urgently exploring ways to rescue Spain's debt-stricken banks eased some of the pressure on Spanish government debt ahead of a planned auction of up to 2 billion euros ($2.5 billion) in new bonds on Thursday.

Spain, the euro zone's fourth biggest economy, said on Tuesday it was effectively losing access to credit markets due to prohibitive borrowing costs and appealed to European partners to help revive its banks.

Spanish 10-year bond yields were 3.5 basis points lower at 6.28 percent, extending this week's fall to around 25 basis points.

Gold rose more than 1 percent to $1,633.18 an ounce, its highest level in a month, on the central bank stimulus hopes.

Other precious metals rose in gold's wake, with both silver and palladium climbing nearly 3 percent to their day's highs.

In the oil markets prices also found support from the larger-than-expected drop in U.S. crude stocks reported by the American Petroleum Institute industry group.

Brent crude, which had seen a near 25 percent drop in the past three months, rose by $1.47 to $100.31 a barrel, while U.S. crude climbed $1.16 cents to $85.45.

Weekly inventory data from the U.S. Energy Information Administration, which typically carries more weight in the market than API estimates, will be released later on Wednesday.

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