Wednesday August 12, 12:31 PM
European stocks rise before US Fed rate call
LONDON (AFP) - Europe's main stock markets edged upwards on Wednesday as dealers paused after recent sharp losses and awaited the outcome of the US Federal Reserve's crucial monetary policy meeting.
London's benchmark FTSE 100 index of leading shares rose 0.51 percent to 4,695.20 points approaching midday in the British capital.
Frankfurt's DAX 30 (Xetra: news) gained 0.67 percent to 5,321.26 points and in Paris the CAC 40 (Paris: news) added 0.58 percent to 3,476.16.
The DJ Euro Stoxx 50 index of leading eurozone shares won 0.54 percent to 2,665.16 points.
The Federal Open Market Committee (FOMC) concludes a two-day policy meeting Wednesday widely expected to hold unchanged its key federal funds rate at a record low range of zero to 0.25 percent to spur lending and economic activity.
"Traders will now look ahead to the FOMC rate announcement this evening and this may put a leash on today's gains somewhat," said City Index analyst Joshua Raymond.
London gains were also capped by news that Britain's unemployment rate and number of unemployed had hit levels last seen in the mid-1990s.
On the foreign exchange market, the European single currency fell to 1.4095 dollars as investors awaited clues from the Fed on when it intends ending emergency policy measures as the economy recovers.
The US central bank is likely to wait to ensure a sustainable economic recovery is underway before lifting interest rates from the current level near zero, analysts said.
"The Fed does not appear set to spring any surprises, admitting that recent data has been more upbeat and that the pace of contraction has slowed," said Calyon analyst Simon Smollett.
Markets will focus on whether the Fed will adjust its unprecedented efforts to pump over one trillion dollars of liquidity into the stricken financial system, which some call "quantitative easing."
MF Global Spreads analyst Manus Cranny said that the Fed may decide to follow in the footsteps of the Bank of England, which last week pumped extra billions into the recession-hit British economy in a surprise move.
"I fancy the Fed to catch the market on the hop, as per the BoE last week," Cranny said.
"The anecdotal evidence of (economic) green shoots are there -- but it might just be that they throw one last dose of paraffin on the quantitative-easing pyre," he added.
Wall Street had skidded lower on Tuesday for the second day in a row as investors remained on tenterhooks before the Fed rate call.
In Asia on Wednesday, Tokyo shares closed down 1.42 percent as many investors took profits a day after the market touched a new 10-month high on economic recovery hopes.
Frankfurt, London and Paris stocks had plunged in value on Tuesday with banking shares leading the way as jitters also persisted over the health of the financial sector.
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