European stock markets mostly drop

European equities mainly fell Tuesday amid tentative hopes that US Federal Reserve chief Ben Bernanke would this week outline steps to boost the world's biggest economy, dealers said. In late morning trade, Frankfurt's benchmark DAX 30 index of top companies shed 0.36 percent to 7,022.02 points and in Paris the CAC 40 slid 0.53 percent to 3,444.64 points. London's FTSE 100 rose 0.02 percent to 5,777.88 as investors returned to their desks after a three-day holiday weekend. Spanish shares lost 0.10 percent but Italian stocks gained 0.36 percent as traders digested news of bond auctions at lower rates in both Madrid and Milan. But sentiment in Madrid was hampered by news that Spain's debt-laden economy shrank by 0.4 percent in the second quarter of 2012, extending the nation's painful recession. In foreign exchange deals, the European single currency increased to $1.2552, compared with $1.2497 late in New York on Monday. Investors were waiting to see what central bankers say about stimulus measures when they meet in Jackson Hole, Wyoming, with US Federal Reserve Chairman Ben Bernanke set for a key address on Friday. Many traders had also been hoping for possible hints about the European Central Bank's plans for a new programme to buy bonds of indebted eurozone states. "Markets remain cautiously optimistic that a combination of both ECB action coupled with a bout of Fed related monetary stimulus will be forthcoming," said CMC Markets UK analyst Brenda Kelly. However, ahead of the Jackson Hole symposium, it emerged that ECB President Mario Draghi will not attend due to a heavy workload. "Upside momentum is flagging and equity markets need to see a pick-up in trading volumes to maintain the summer rally," added GFT analyst David Morrison. "With Draghi announcing that he won't be attending Jackson Hole due to his workload, the focus shifts back to Ben Bernanke who will speak on Friday. "But, as investors put the summer behind them, the European debt crisis is likely to re-emerge as the global economy's number one problem. Even if we do get more monetary easing, central bankers are likely to insist that this alone is not the cure for all ills." Asian shares were mixed Tuesday amid stubborn fears about the eurozone debt crisis and a slowdown in China. Shanghai jumped 0.85 percent and Sydney gained 0.36 percent, while Hong Kong edged up 0.07 percent. But Tokyo fell 0.57 percent after the Japanese government cut its view of the world's third largest economy in August for the first time in 10 months. "While the lack of confidence in the macroeconomic outlook stressed by the recent cut of the forecast by Japan highlights the fact that the global growth remains a real concern, a rather quiet economic calendar keeps the debt crisis in focus of investors," said Gekko Global Markets trader Anita Paluch. "Markets are trading lower, but the landscape does not look so terrible as investors are adopting this wait-and-see attitude before Bernanke's speech."