Most European stocks advance despite Fed jitters
LONDON (AFP) - Most European stock markets advanced on Wednesday, with Frankfurt setting a new record high, despite anxiety ahead of the US Federal Reserve's expected announcement of how quickly it plans to reel in its vast economic stimulus programme.
While London's benchmark FTSE 100 index slid 0.17 percent to 6,558.82 points, Frankfurt's DAX 30 added 0.45 percent to a new record high of 8,636.06 points.
The CAC 40 in Paris meanwhile climbed 0.60 percent to 4,170.40 points, a level last seen in September 2008 when the global financial crisis began with the collapse of Lehman Brothers investment.
Milan added 0.30 percent and Madrid climbed 0.78 percent.
The US central bank is forecast to maintain interest rates but begin scaling back its enormous stimulus programme, with a statement due at 1800 GMT.
While economists tip the Fed to announce a taper of its $85-billion-a-month bond-buying scheme -- known as quantitative easing (QE) -- the big question is how much it will be cut by.
"All eyes are on the Fed. The waiting and weeks of speculation should be over," said trader Anita Paluch at Gekko Markets.
"While no surprises are expected when it comes to the benchmark interest rate decision, the announcement of a reduction in its generous and unprecedented $85-billion a month stimulus programme is what makes this statement so extraordinary.
"Little changes are seen now in the markets while the countdown continues," she added.
Reduction forecasts range from $5 billion to $15 billion, and Michael James, managing director of equity trading at Wedbush Securities, said a larger taper "might cause a little bit of market weakness. Anything else is priced in."
Global markets have focused intently on the Fed's plans for its stimulus, which has been credited with fuelling a huge investment spree.
Emerging economies -- particularly India and Indonesia -- have suffered a flight of foreign cash since Fed boss Ben Bernanke in May said the US economy was showing signs of strength that meant QE could be wound down.
In foreign exchange trade, the euro eased to $1.3352, down from $1.3356 late in New York on Tuesday.
The dollar fell to 98.99 yen from 99.14.
Sterling was up against both the euro and the dollar. One British pound bought $1.5966, up from $1.5904 on Tuesday, and 1.1958 euros, up from 1.1905 euros.
Asian equities were also mixed on Wednesday.
Tokyo rose 1.35 percent and Shanghai added 0.29 percent, but Sydney ended 0.25 percent lower and Hong Kong eased 0.27 percent.
Wall Street was little changed after closing higher Tuesday amid greater investor confidence that the US economy could withstand a reduction in Fed bond purchases.
The Dow Jones Industrial Average retreated 0.25 percent, while the broad-based S&P 500 slid 0.18 percent and the tech-rich Nasdaq Composite Index slipped 0.06 percent.
Yields on US treasury bonds were up after a five-day slide as buyers treaded cautiously before the Fed announcement.
The yield on 10-year bonds stood at 2.88 percent, up from 2.855 percent. The 10-year note's yield has soared from 1.61 percent on May 1.
In commodity markets, the price of gold sank to $1,301 an ounce on the London Bullion Market, from $1,312.25 late on Tuesday.
Gold hit a low of $1,292.02 in morning trading -- the lowest point since August 8 and the first time since then that it sank below the $1,300 barrier.
"Gold is one of the key assets to watch at the moment and has slipped below $1,300... as the threat of tapering looms," said IG analyst Stan Shamu.
Traditionally a hedge against inflation, gold has tumbled on growing speculation over Fed tapering. Many investors argue that QE fuels higher inflation.
On the company radar on Wednesday, British bank Barclays was the biggest faller in London after the launch of its £5.8-billion rights issue this week.
The bank's share price slumped 7.3 percent to 277.2 pence.
"Barclays has fallen... purely as a result of the shares rights issue," noted Max Cohen, analyst at traders Spreadex.
Shares in Air France-KLM lost 2.37 percent to 6.93 euros despite the company increasing its target for job cuts next year to 2,800 posts.
