European stocks break three-day losing streak

FTSEurofirst 300:  828.63 (0.2%) at 11.45am:  European stocks were slightly up about midday gaining ground for the first time in four sessions, led by pharmaceutical and telecoms shares, as investors braced for a rate decision by the US Federal Reserve.

The market trimmed gains after a five explosive devices were found in a large store in central Paris following an anonymous tip off.

"That's the last thing the market needs, right in the middle of the Christmas shopping season. It will scare people out of stores, it's a catastrophe for retailers," one Paris-based trader said.

The banking sector remained under pressure ahead of quarterly results from Wall Street firm Goldman Sachs and after grim research notes on the sector.

Credit Suisse was among Europe's biggest losers, down 3.8 per cent after Morgan Stanley analysts downgraded their rating on the stock to "equal-weight" from "overweight", citing further impairment risk from forced shrinkage and winding down businesses.

At 11.45am, the FTSEurofirst 300 index of top European shares was up 0.2 per cent at 828.63 points. Europe's benchmark index is down 45 per cent in 2008, but has gained 10 per cent since reaching a floor late last month.

"We've touched a bottom on November 21st with the rescue of Citigroup, and I believe we're now in a stabilisation phase, with the prospect of a global recession already digested by the market," said Francois Chevallier, strategist at VP Finance, in Paris.

"Falling credit spreads, and the fact that investors have started to brush aside negative macroeconomic data, are positive signals for stocks."

The Fed is expected to lower interest rates closer to zero and point toward emergency tools it could deploy to end a year-long economic downturn, with room to cut borrowing costs running out.

Economists expect the Fed to cut its target for benchmark overnight rates by at least a half-percentage point, to 0.5 per cent, and clearly state it will aggressively use unconventional measures to restore growth.

The rate decision and accompanying policy statement are expected at about 7.15pm, after Europe's stock market closing bell.

Mining shares got hammered as metal prices retreated today, with Rio Tinto down 5.6 per cent and Anglo American down 3.2 per cent.