European stocks firm before Fed decision

European stock markets edged higher Wednesday with traders expecting the US Federal Reserve to announce plans to start reeling in its vast economic stimulus programme. In late morning trade, London's benchmark FTSE 100 index added 0.10 percent to 6,576.24 points. Frankfurt's DAX 30 gained 0.30 percent to 8,622.68 points and the CAC 40 in Paris rose 0.31 percent to 4,158.30. The euro eased to $1.3354, down from $1.3356 late in New York on Tuesday "Caution seems very much the watchword ahead of the Fed announcement," noted Ronnie Chopra, head of strategy at brokers Tradenext. The US central bank is forecast to maintain interest rates but begin scaling back its enormous stimulus programme, with a statement due at 1800 GMT. While economists tip the Fed to announce a taper of its $85-billion-a-month bond-buying scheme -- known as quantitative easing (QE) -- the big question is how much it will be cut by. "All eyes are on the Fed. The waiting and weeks of speculation should be over," said trader Anita Paluch at Gekko Markets. "While no surprises are expected when it comes to the benchmark interest rate decision, the announcement of a reduction in its generous and unprecedented $85-billion a month stimulus program is what makes this statement so extraordinary. "Little changes are seen now in the markets while the countdown continues," she added. Reduction forecasts range from $5 billion to $15 billion, and Michael James, managing director of equity trading at Wedbush Securities, said a larger taper "might cause a little bit of market weakness. Anything else is priced in." Global markets have focused intently on the Fed's plans for its stimulus, which has been credited with fuelling a huge investment spree. Emerging economies -- particularly India and Indonesia -- have suffered a flight of foreign cash since Fed boss Ben Bernanke in May said the US economy was showing signs of strength that meant QE could be wound in. Asian equities traded mixed on Wednesday after a strong lead from Wall Street overnight, with investors also biding their time before the Fed news. In commodity markets Wednesday, the price of gold sank to $1,292.02 an ounce -- the lowest point since August 8. That compared with $1,312.25 late on Tuesday on the London Bullion Market. "Gold is one of the key assets to watch at the moment and has slipped below $1,300... as the threat of tapering looms," said IG analyst Stan Shamu. Traditionally a hedge against inflation, gold has tumbled on growing speculation over Fed tapering. Many investors argue that QE fuels higher inflation. Official data showed Tuesday that US consumer prices rose by just 0.1 percent in August as inflation remained tame. "US inflation remained in check... which spurred further problems for gold investors," noted Capital Spreads dealer Jonathan Sudaria. On the company radar on Wednesday, British bank Barclays was the biggest faller in London after the launch of its £5.8-billion rights issue this week. The bank's share price slumped 6.32 percent to 280.1 pence. "Barclays has fallen... purely as a result of the shares rights issue," noted Max Cohen, analyst at traders Spreadex.