European stocks drop before Fed update

European stock markets fell on Wednesday, with investors booking profits ahead of an update from the US Federal Reserve and in reaction to eurozone unemployment data. London's FTSE 100 index of top companies slid 0.38 percent to 6,729.92 points. In Frankfurt, the DAX 30 index lost 0.15 percent to 9,492.29 points and in Paris the CAC 40 dipped 0.08 percent to 4,259.24 in midday deals compared with Tuesday's closing values. "Traders are playing it safe as they await the update from the Fed," said David Madden, market analyst at IG traders. "Tonight's minutes will give us an insight into why the US central bank decided to trim its bond-buying scheme, and we are likely to see lowvolumes and volatility until then." Investors are awaiting the release of minutes from the Federal Reserve's policy meeting to see if another cut in its stimulus could be on the cards, while closely watched jobs figures are due later in the week. The US central bank said at its last meeting that from January it would cut its bond-buying by $10 billion a month to $75 billion. Minutes for that gathering are due for release later Wednesday and could give clues about its future intentions. In the eurozone, unemployment continued near record highs in November at 12.1 percent but there were signs the bad times may be easing as the debt crisis peaks out, analysts said on Wednesday. They said other data, notably a sharp improvement in retail sales, suggest the economy could be holding its own again after a soft patch but progress would remain slow. The eurozone jobless rate came in at 12.1 percent in November, unchanged from October, while retail sales rose 1.4 percent by volume, more than reversing a fall of 0.4 percent in October, the Eurostat statistics agency said. In Britain, which is part of the European Union but not the eurozone, investors focused on Christmas trading updates. Shares in Sainsbury's dropped 2.0 percent to 361.42 pence after Britain's second-biggest supermarket group announced mixed quarterly sales. Sainsbury's reported that a tough autumn gave way to a record Christmas period, highlighting shoppers' tightening of budgets amid austerity. Shares in Mothercare, which sells products for babies and toddlers, crashed by more than a quarter to stand at 304 pence in midday deals after the group had shocked the market with a profits-warning. "It was a bit of bloodbath for Mothercare this morning, down over 30 percent after being forced to issue a full year profit warning and throwing a dummy to a market caught off guard after a strong start to January prior to the update, " said Toby Morris, senior trader at CMCMarkets. In Paris, on the secondary SBF market, shares in French video games software company Ubisoft jumped by 6.38 percent to 10.20 euros, boosted by a decision by China to open its market to foreign game consoles. The decision opens up huge potential for games software companies such as Sony and Microsoft. Asian markets ended mixed on Wednesday, but Tokyo surged in response to a weaker yen and a Wall Street rally a day earlier that had been sparked by stronger US economic data, traders said. In foreign exchange, the European single currency dropped to $1.3595 from $1.3613 late on Tuesday in New York. The euro fell to 82.81 British pence from 83.00 pence Tuesday. The British pound rose to $1.6417 from $1.6399. Gold prices dipped to $1,226.92 an ounce from $1,227.50 Tuesday on the London Bullion Market.