European stocks advance with all eyes on Fed

European equity markets climbed on Wednesday as investors awaited the outcome of the Federal Reserve's policy meeting that could trigger a scaling back of its huge US stimulus programme. London's benchmark FTSE 100 index advanced 0.28 percent to stand at 6,504.67 points around midday in the British capital. Frankfurt's DAX 30 added 0.97 percent to 9,172.65 points, boosted by upbeat data, and the CAC 40 in Paris gained 0.74 percent to 4,098.46 compared with Tuesday's closing values. With the Fed due to wrap up its two-day policy meeting at 1900 GMT, opinion is split on whether it will announce a cut in its $85 billion a month bond-buying scheme known as quantitative easing (QE). "Recent economic data from the US has highlighted the recovery, but it still seems too soon to trim the stimulus package," said analyst David Madden at traders IG. "The jobless rate in the US has only recently dipped to 7.0 percent, and could well be revised upward next month. So I think the US central bank will wait for further proof that the economy can withstand a reduction in the QE scheme." While some analysts point to a string of figures that indicate a healthy pick-up in the US economy, boosting the argument for a slight reduction, others say the central bank will likely wait until early next year to see if the recovery can be sustained. "Tonight's Fed announcement looms large across the markets," said analyst Alistair Cotton at traders Currencies Direct. "The US central bank still retains its ability to surprise and there is still a good degree of uncertainty as to whether the pace of asset purchases will be slowed this month or if the Fed wait until early 2014." Ahead of the Fed announcement, sentiment was partly boosted by news of soaring German business confidence. The Ifo economic institute's closely watched business climate index climbed to 109.5 points in December, which was the highest level since April 2012. The previous month, it had stood at 109.3 points. In foreign exchange trading, the euro dipped to $1.3748 from $1.3765 late in New York on Tuesday. Sterling was lifted by news that Britain's unemployment rate had hit a four-year low point. The European single currency fell to 84.04 pence from 84.63 pence on Tuesday. The British pound rebounded to $1.6358 from $1.6264. Official data showed that the British unemployment rate slid to 7.4 percent in the three months to October from 7.6 percent in the quarter ending in September. "Sterling is stronger across the board as a natural reaction to the positive data. This is bringing expectations forward of a monetary policy tightening by the Bank of England," said ING strategist Chris Turner. The British central bank has stated that it will not raise borrowing costs from a record-low 0.50 percent at least until the jobless rate falls to seven percent, under a "forward guidance" policy. Elsewhere on Wednesday, gold rose to $1,234.44 per ounce on the London Bullion Market from $1,231.75 on Tuesday. In company movement, energy group Centrica topped the risers board in London after announcing plans to sell three US gas-fired power stations to private equity firm Blackstone for $685 million in cash. The British company added that it would return the money to shareholders via its share buyback programme. In reaction, Centrica shares surged 3.22 percent to 333.50 pence. In Paris, shares in oil services group Technip plunged 7.46 percent to 62.0 euros after the company published a downbeat outlook for this year and next.