European stocks subdued awaiting ECB

Europe's main stock markets diverged in subdued trade on Thursday as investors waited to see whether the European Central Bank would act to ease eurozone debt crisis strains. In morning deals, London's benchmark FTSE 100 index of top companies added 0.26 percent to 5,727.76 points and the Paris CAC 40 won 0.12 percent to 3,325.52, while Frankfurt's DAX 30 dropped 0.09 percent to 6,747.62 points. Madrid's IBEX 35 index slid 0.28 percent, but Milan's FTSE-MIB eked out a slender gain of 0.03 percent. The European single currency meanwhile firmed to $1.2270 from $1.2223 in New York late on Wednesday. Asian equities were also mixed in tentative trade Thursday ahead of a European Central Bank (ECB) meeting that investors hope will produce a fresh round of stimulus measures to support the euro. Wall Street grinded lower on Wednesday after the Federal Reserve kept its monetary policy unchanged -- a widely expected move that nevertheless disappointed those hoping for a sign of new economic stimulus. Instead, Fed policymakers reiterated their pledge to leave US interest rates close to zero until the end of 2014 and reaffirmed their readiness to act. "European markets opened flat as traders await the ECB's policy meeting ... after the Fed defied expectations and held back from any further asset purchasing, causing US markets to sell off," said Spreadex analyst Matthew Nelson. "The main focus of today's European session will of course be the ECB's policy meeting this afternoon." He added that traders were expecting that "further stimulus measures will be introduced" after ECB chief Mario Draghi pledged last week to do all that is necessary to save the euro. Stocks had jumped last week after ECB chief Draghi said one week ago that the bank was "ready to do whatever it takes to preserve the euro. And believe me it will be enough". The Bank of England will also announce its latest interest rate decision at 1100 GMT on Thursday, followed by the ECB call at 1145 GMT. "Markets are now trading in narrow ranges, as everyone is looking up to Mario Draghi to see whether he is going to live up to the expectations he raised after by his last week's comments," added trader Anita Paluch at Gekko Global Markets. "Lack of any concrete declarations of actions will be a huge disappointment," she warned. Draghi's comments set off a raft of similar promises from top eurozone leaders including German Chancellor Angela Merkel. In Asian deals on Thursday, Tokyo stocks rose 0.13 percent and Sydney added 0.16 percent. On the downside, Hong Kong shed 0.66 percent, Shanghai fell 0.57 percent and Seoul closed 0.56 percent lower. Stocks have boomed since Draghi's comments, with many dealers taking them as a nod to a fresh round of bond purchases to ease the pressure on troubled eurozone nations Spain and Italy. However, many analysts warn that there is still uncertainty on what precisely the ECB will do. "There is great uncertainty surrounding today's meeting. Plenty of possible policy measures have been discussed in the market, and there is no clear consensus view," added Lloyds bank analysts in a note to clients. Spain's borrowing costs rose Thursday in a sale that raised a total 3.132 billion euros with the average yield on benchmark 10-year bonds at 6.647 percent compared to 6.430 percent in the last comparable auction on July 5. Ratings agency Standard & Poor's meanwhile lowered embattled eurozone member Cyprus's long-term rating to BB, pushing it into negative watch. Later on Thursday, investors will switch focus again to the United States, where payrolls data for July will be released, with investors hoping for a clearer guide as to the state of the world's top economy.