European stock markets rose yesterday, a day after suffering sharp falls, as traders digested mixed economic data before the outcome of the Fed’s monetary policy meeting. London’s FTSE 100 index of top companies gained 0.12% to 5,804.78 points at the close, Frankfurt’s DAX 30 rose 0.27% to 7,192.85 points, while in Paris the CAC 40 won 0.59% to 3,426.49 points. Madrid’s Ibex 35 index firmed 0.57% to 7,791.5 points. “The rush of selling appears to have subsided for now, but this may just be a pause in the current bout of risk aversion,” said Chris Beauchamp, analyst at IG trading group. In foreign exchange trading, the euro fell to $1.2947 from $1.2978 late in New York on Tuesday. Gold prices slipped to $1,706.50 an ounce on the London Bullion Market from $1,711 an ounce on Tuesday. In Berlin, European Central Bank president Mario Draghi defended his euro-crisis strategy in the German parliament, where his plan to buy bonds of struggling nations has come under fire. The so-called OMT bond-purchase programme “will not lead to disguised financing of governments” and “will not lead to inflation,” Draghi said. He added that the ECB expected the eurozone economy “to remain weak in the near term” and warned that “euro area unemployment remains deplorably high.” The eurozone crisis was increasingly hitting Germany, data showed, with business confidence falling for the sixth month in a row to the lowest level since February 2010. The Ifo economic institute’s closely watched business climate index dropped to 100 points in October from 101.4 points in September, whereas analysts had expected a slight rise. “Markets can live with poor figures from most of the eurozone, but disappointment from the union’s strongest pillar is perhaps more than investors can bear,” said Beauchamp. “Even better data from China, where the HSBC PMI indicated signs of recovery, was not enough to put markets on the front foot,” he added. In ths US, the Federal Reserve was to conclude its policy meeting later yesterday, with the central bank expected to keep its stimulus programme in place. Six weeks after breaking out a new bond-buying programme commonly known as QE3 to shore up the economy, analysts see little reason to expect a reverse of direction. The signs of recovery remain too feeble, and the overhanging risks too many — the US election on November 6 and a “fiscal cliff” threat, the ongoing eurozone crisis and China’s slowdown — to justify a policy change. “The recent upturn in economic activity is not enough to force the Fed’s hand to change now. It is far too soon for the Fed to react and will more likely reaffirm their commitment to QE3,” said Chris Low at FTN Financial. “After all, the economy is still adding fewer than 150,000 jobs a month, not enough to cover demographic changes or meet (Fed chairman Ben) Bernanke’s goals,” Low said.