(MENAFN- AFP) European stock markets slid on Tuesday as investors looked ahead to a policy meeting of the US Federal Reserve and the looming referendum on Scottish independence.
However sterling steadied, while the euro firmed, and the ruble tumbled.
London's benchmark FTSE 100 index shed 0.18 percent to close at 6,792.24 points, while Frankfurt's DAX index dropped 0.28 percent to 9,623.93 points and in Paris the CAC 40 fell 0.44 percent to 4,409.15 points.
"Shares in Europe fell across the board today as investors took a more defensive stance leading into tomorrow's Fed meeting particularly given the reported weak capital flows into China and a further drop in German investor confidence," said Jasper Lawler, an analyst at CMC Markets UK.
Investor sentiment in Europe's biggest economy, Germany, fell for the ninth month in a row in September amid jitters about the economic fallout from global crises, a survey indicated on Tuesday.
The widely watched investor confidence index calculated by the ZEW economic institute fell by 1.7 points to 6.9 points in September, it said in a statement.
On the corporate front, shares in Spanish fixed-line operator Jazztel soared after French telecom giant Orange made a 3.4-billion-euro ($4.4-billion) bid for the firm.
Jazztel shares surged 6.1 percent to 12.78 euros, compared to a 0.39 percent fall in Madrid's benchmark IBEX 35 index.
Shares in advertising group Publicis gained 0.41 percent to 56.62 euros in Paris after the company announced its chief executive Maurice Levy will extend his term until 2017.
- Unease over Fed -
Asian stock markets slipped on Tuesday before the Federal Reserve's meeting, and as lingering concerns over Chinese and US economic data weighed on global markets, dealers said.
The US central bank might adjust its timing for raising benchmark interest rates. Critics say its nearly six-year-old zero-rate policy is feeding asset bubbles and possibly inflation.
"As long as rates remain at record lows, there is reason for US indices to be at these highs," said Erlam.
"That's why people are concerned about the Fed's stance... after rumours surfaced that the Fed is preparing to drop its commitment to keep rates low for a considerable amount of time."
A weak US inflation report helped soothe those concerns as the Federal Open Market Committee began Tuesday its two-day monetary policy meeting.
In midday trading, the Dow Jones Industrial Average rose 0.29 percent to 17,079.96 points.
The broad-based S&P 500 gained 0.46 percent to 1,993.20 points, while the tech-rich Nasdaq Composite Index added 0.15 percent to 4,525.64 points.
- British inflation slows -
In Britain, 12-month inflation dipped to 1.5 percent in August from 1.6 percent in July, official data showed, easing pressure on the Bank of England to raise its record-low interest rate of 0.5 percent.
Attention was focused on Scotland before the country votes on Thursday on whether to split from the rest of Britain.
Polls have showed a late surge in support for independence, putting the outcome on a knife edge, after the several months of the pro-union "No" camp holding a clear lead.
"It's the theme of uncertainty that appears to be weighing.... It remains a close race and this news clearly isn't sufficient to placate fears in financial markets," said Trustnet Direct analyst Tony Cross.
The British pound last week slumped to a 10-month low against the dollar and three-month trough compared to the euro on fears over the impact of Scottish independence.
However in Tuesday trading, the pound steadied, edging up to $1.6240 from $1.6234 late in New York on Monday.
The euro climbed to 79.75 pence from 79.71 pence.
The European single currency rose to $1.2954 from $1.2940 on Monday.
The Russian ruble fell to a record level of 38.82 rubles per dollar after weakening on Monday, punching through the 38-rubles-to-the-dollar level for the first time.
And it broke through the symbolic level of 50 rubles per euro for the first time for several months.
The ruble has slumped as investors fret about the impact of ever more stringent Western sanctions on the Russian economy, which is already teetering on the verge of recession.
On the London Bullion Market, gold gained to $1,232.25 an ounce from $1,234.25.
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