Europe stocks slip awaiting cost of Spain bank bailout

Europe\'s main stock markets retreated Thursday as Spain prepared to announce the cost of bailing out its banks, and after the US Federal Reserve promised only muted stimulus to boost the economy. Markets were also downbeat following weak Chinese manufacturing data but were off early-session lows in the wake of a solid Spanish bond auction, traders said. Approaching midday in London, the benchmark FTSE 100 index of leading companies was down 0.54 percent at 5,591.75 points. Frankfurt\'s DAX 30 dropped 0.39 percent to 6,366.90 points and in Paris the CAC 40 fell 0.41 percent to 3,113.79 percent. Madrid\'s IBEX 35 index dipped 0.08 percent to 6,789.5 points. In foreign exchange deals, the euro fell to $1.2664 from $1.2702 late on Wednesday in New York. \"Financial markets are under pressure again, with clients reducing appetite for risk -- preferring traditional safe havens like core government bonds versus equities and riskier currencies like the euro,\" said Ishaq Siddiqi, a market strategist at ETX Capital trading group in London. Madrid was to later Thursday reveal the price of a vast banking rescue that has stoked fears of a full-blown bailout. Ahead of the announcement, Spain showed it could still tap the bond market at a pivotal time by easily raising 2.22 billion euros for a mixture of two-, three and five-year bonds. But it had to pay soaring rates to lure investors. \"A solid Spanish debt auction has been a driver of the markets\' mild recovery heading into lunch,\" said Siddiqi. Asian stock markets meanwhile mostly closed lower Thursday on disappointment at the US Federal Reserve\'s muted stimulus measures aimed at kickstarting the economy, while European concerns also remained in focus. Adding to the selling pressure were preliminary numbers from banking giant HSBC showing China\'s manufacturing activity hit a seven-month low in June. Sydney\'s stock market fell 1.09 percent, Seoul gave up 0.79 percent and Hong Kong tumbled 1.30 percent. Tokyo closed up 0.82 percent owing to a slightly weaker yen, traders said. The US central bank on Wednesday said it would extend Operation Twist -- selling short-term debt to buy longer term Treasuries -- for another six months and was \"prepared to take further action\" if needed. The plan is to push down interest rates for borrowers, reducing mortgage repayments. However, traders who had sent stock markets spiking on Wednesday in expectation of a third round of monetary stimulus -- or quantitative easing -- were unimpressed. The Fed, after a two-day meeting, also predicted US growth would be even worse than thought this year, forecasting 2012 growth of between 1.9 and 2.4 percent -- a half point cut from predictions made as recently as April. Chairman Ben Bernanke also pointed to slower progress in reducing unemployment and to spillovers from Europe\'s economic crisis.