European stocks mostly slip on eve of ECB

Europe's stock markets mainly fell Wednesday, erasing earlier gains in cautious deals on the eve of a critical ECB meeting that is forecast to launch a radical economic stimulus policy.
Investors widely expect that the European Central Bank will decide Thursday to begin a sovereign bond-buying programme, known as quantitative easing (QE), to boost the sagging 19-nation economy and combat deflation, but analysts remain uncertain over the exact size of the stimulus.
"European shares are trading little changed ... ahead of tomorrow’s eagerly awaited ECB meeting," said analyst Markus Huber at broker Peregrine & Black.
"While very few doubt that the ECB will announce some kind of a QE tomorrow there are still plenty of speculations about the size of the QE and specifics -- like who exactly will do the buying, individual central banks or the ECB, and who will shoulder the risk."
In midday deals, London's benchmark FTSE 100 index of top companies won 0.71 percent to 6,667.10 points, lifted by news that British unemployment has struck another six-year low and expectations that a Bank of England rate hike is a long way off.
Elsewhere, Frankfurt's DAX 30 slid 0.25 percent to 10,231 points and the CAC 40 in Paris lost 0.26 percent to 4,434.40 compared with Tuesday's close.
The European single currency firmed to $1.1568 from $1.1553 late in New York on Tuesday, when it was hit by persistent QE speculation.
Some analysts have suggested that the ECB's QE programme could include at least 500 billion euros of government debt and up to 250 billion euros of other non-financial corporate debt.
- Size of QE 'crucial' -
"The size of this QE package is absolutely crucial for the markets and how the markets will react," Forex.com research director Kathleen Brooks told AFP.
"Anything below 500 billion (euros) would be considered a real disappointment, largely because it would just be a drop in the ocean, especially compared to QE programmes that we've got used to, things that came out of the Federal Reserve or the Bank of Japan."
She added there was a large political risk attached to QE stimulus in the 19-nation euro currency area, particularly for eurozone powerhouse Germany.
"There's a huge political cost to doing QE in the eurozone, because largely it means risk-sharing," Brooks said.
"So if your central bank is buying up the assets of various member states, then all of a sudden Germany, in particular -- they've got the biggest economy in the eurozone -- could be liable if those states don't pay bank the central bank."
Europe's main equity indices had also advanced on Tuesday, winning a boost from German data and expectations of ECB stimulus, while investors also awaited key elections in Greece due on Sunday.
"Tomorrow’s ECB verdict remains top of the agenda from a global markets perspective and any disappointment could inject a degree of panic," cautioned analyst Tony Cross at traders Trustnet Direct.
- Tokyo slides on BoJ -
Elsewhere on Wednesday, Tokyo shares fell, countering a broad rally in Asian markets after the Bank of Japan (BoJ) slashed its inflation forecast and held off fresh easing measures after a two-day meeting.
The yen rose against both the dollar and the euro on the news, however, as traders took solace in the BoJ's announcement that it was also raising Japan's growth outlook on signs the economy was rebounding.
Tokyo's benchmark Nikkei 225 index closed 0.49 percent lower.
Japan was the exception, however, as a broad rally across Asian markets saw Hong Kong rise 1.6 percent and Shanghai rally 4.74 percent.
Sydney gained 1.62 percent and Seoul won 0.15 percent in value.