European stocks fall as US economy contracts

European stock markets slid and the euro gained on Wednesday on news the US economy unexpectedly contracted in the fourth quarter last year and on bright eurozone confidence data. London's FTSE 100 index of top companies dipped 0.14 percent to 6,330.39 points in afternoon deals, Frankfurt's DAX 30 dropped 0.39 percent to 7,818.24 points and in Paris the CAC 40 shed 0.41 percent to 3,770.26 points. In Milan, the FTSE Mib slumped 2.56 percent to 17,431.79 points after energy company Saipem, a unit of ENI, warned 2012 results would fall short of forecasts and that 2013 would remain difficult. Madrid's IBEX 35 index slid 0.82 percent to 8,572.50 points on news that Spain's growth shrank 0.7 percent in the fourth quarter of 2012, as recession tightened its grip on the eurozone's fourth-largest economy. At the same time, the European single currency spiked to $1.3555, buoyed by upbeat confidence data. That was the highest level since December 2011 and compared with $1.3493 late on Tuesday in New York. In Europe, the European Commission's eurozone confidence index rose in January to 89.2 points -- reaching a level last seen in June 2012. That marked the third successive monthly increase and compared with the December level of 87.8. At the open on Wall Street, the Dow Jones Industrial Average was down 0.08 percent, the S&P 500 lost 0.05 percent, but the tech-rich Nasdaq Composite gained slightly, adding 0.11 percent, helped by a 7.5 percent gain from Amazon. According to the government's first estimate, the US economy contracted at a rate of 0.1 percent in the fourth quarter, mostly due to defense spending cutbacks. But the economy expanded overall by a modest 2.2 percent for the full year in 2012, a gain from 1.8 percent in 2013, the Commerce Department said. "The slowdown is only in appearance as households and businesses actually increased their spending," said Alexandra Estiot of BNP Paribas. "The beginning of 2013 could be difficult with austerity weighing on activity. Afterwards, a resurgence in investment and hiring should encourage growth," she said. Asian equities shot higher on Wednesday, with Tokyo also fuelled by continuing weakness in the yen. European markets had powered higher earlier in the week on positive German data and as banks repaid early their emergency loans from the European Central Bank. "Earnings have been mixed at best from Europe, adding to the downside pressure which sees the region's indices flipping between small gains and losses," noted Ishaq Siddiqi, an analyst at ETX Capital trading group. In corporate news on Wednesday, E.ON shares were unchanged at 13.32 euros, despite the energy group forecasting a sharp drop in annual profits as a result of the difficult industry environment and divestments. Germany's biggest power supplier said in a statement that it was forecasting underlying net income of 2.2-2.6 billion euros ($2.9-3.5 billion) for 2013, down from 4.3 billion euros in 2012. On the London Bullion Market, gold prices firmed to $1,666.29 an ounce from $1,663.50.