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European equities mostly slip before Fed announcement

European stock markets mainly fell on Wednesday as the US Federal Reserve prepared to make its latest monetary policy decisions, but the euro jumped above $1.35 on bright eurozone confidence data, traders said.

London's FTSE 100 index of top companies edged up 0.04 percent to 6,342.15 points in midday deals, but Frankfurt's DAX 30 dropped 0.14 percent to 7,837.56 points and in Paris the CAC 40 shed 0.11 percent to 3,781.71.

Madrid's IBEX 35 index slid 0.25 percent to 8,621.30 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 $1.3542, buoyed by upbeat confidence data. That was the highest level since December 2011 and compared with $1.3493 late on Tuesday in New York.

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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.

On the London Bullion Market, gold prices firmed to $1,666.29 an ounce from $1,663.50.

All eyes were on the United States, where the Federal Reserve was due to end a key policy meeting later Wednesday. Most analysts expect the US central bank to maintain its loose monetary policy to help boost the world's biggest economy.

Markets will also digest the first estimate of US gross domestic product for the three months to the end of December. That will be followed on Friday by crucial data on job creation.

"The FTSE has pushed higher once again, although the Fed meeting later today will likely hold markets in check," said analyst Chris Beauchamp at traders IG.

"With the latest Fed decision announced this evening, and US GDP also today, there is the possibility that positive sentiment could take a hit."

Wall Street had jumped higher on Tuesday, with the Dow Jones Industrial Average hitting a fresh five-year high, amid growing optimism over the global economic outlook, dealers said.

In turn, Asian equities also 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.

"European markets are looking exhausted, broadly flat as traders continue to refrain from building equity positions after the recent strength in equity markets on both sides of the Atlantic and in anticipation of more economic data in the hours of ahead," noted Ishaq Siddiqi, an analyst at ETX Capital trading group.

"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."

In corporate news on Wednesday, Britain's Imperial Tobacco saw its share price slump 4.91 percent to 2,344.82 pence in London.

The maker of Lambert & Butler and Gauloises cigarettes issued a profit warning for the first half its financial year, and blamed the poor economic outlook in Europe.

In Frankfurt, E.ON shares edged 0.45 percent higher to 13.38 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.

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