European stocks attempt rebound from Fed-driven slump

European stock markets rebounded on Friday, as investors fished for bargains after a steep slump on Thursday that was driven by the Federal Reserve's plans to cut easy-money stimulus, dealers said. Approaching midday, London's benchmark FTSE 100 index added 1.12 percent to 6,227.28 points, Frankfurt's DAX 30 gained 0.44 percent to 7,964.34 points and in Paris the CAC 40 advanced 0.93 percent to 3,733.74. "The real interesting question though is, how big the rebound is going to be? So far the mood is mildly up, markets have calmed,"said Gekko Markets trader Anita Paluch. All three main European indices had tumbled on Thursday by around 3.0 percent after the Fed signalled it may begin winding down its massive bond-buying policy, which is more commonly known as quantitative easing (QE). The European single currency steadied at $1.3225, unchanged from late in New York on Thursday, when it had struck a ten-day low at $1.3181. In commodity markets, gold climbed to $1,294.30 an ounce in London, after slumping in Asian trading hours to $1,269.45 -- which was the lowest level since mid-September 2010. "Gold prices tumbled... with no large physical buyers or investors in sight," said Andrey Kryuchenkov, analyst at Russian financial group VTB Capital. The precious metal had been hit by a rising dollar, making dollar-priced gold more expensive for buyers using rival currencies, thereby weighing on demand. Gold fell also on receding inflationary concerns, with many investors arguing that QE stimulus stokes inflationary pressures. Investor sentiment has additionally been rocked this week by poor Chinese economic manufacturing data. The losses are part of a global correction in equities and commodities, which had enjoyed strong rallies since the Fed unveiled its bond-buying scheme in September. Tokyo began the day two percent lower, extending Thursday's slump, but it reversed course in the afternoon thanks to the dollar rally and closed 1.66 percent higher. Sydney fell 0.41 percent, while Seoul tumbled 1.49 percent. Hong Kong lost 0.10 percent and Shanghai was off 0.16 percent. Chinese shares pared earlier losses after reports the country's central bank had pumped billions of dollars into several lenders to ease a liquidity crisis. Worries over China's economic slowdown and the possible end to the Fed's stimulus also sent Wall Street into a tailspin on Thursday. New York's Dow Jones Industrial Average lost nearly 354 points, or 2.3 percent, to finish at 14,758.32 points. That was the blue chip index's largest points loss since November 9, 2011. For the US markets, the plunge followed one percent losses on Wednesday sparked by Chairman Ben Bernanke's statement that the Fed could begin pulling back its $85 billion-a-month stimulus program late this year and wind it up by mid-2014. "Optimism was dealt a severe blow as investors continued to grapple with the announcement that stimulus measures from the US could end in the middle of 2014," added Spreadex trader Shavaz Dhalla. "Investors seemed to be astonished by the announcement despite the fact that officials have been alluding to the possibility in recent times."