European stocks fall again on stimulus worries

Europe's stock markets mainly closed in the red Wednesday amid persistent concerns about global stimulus, while traders also digested economic data and takeover activity.

London's FTSE 100 index of leading shares finished 0.64 percent lower at 6,299.45 points, the DAX 30 in Frankfurt shed 0.96 percent to end at 8,143.27 points and the CAC 40 in Paris dropped 0.44 percent to 3,793.7 points, falling under the 3,800 mark for the first time since April 23.

The Milan market followed the trend, nosediving 1.61 percent, while Madrid rose 0.43 percent.

European stocks had already fallen sharply on Tuesday as investors grew increasingly concerned that key central banks would step back from stimulus efforts that have been helping boost markets all year.

"Persisting fears about impending Federal Reserve tapering of asset purchases together with the Bank of Japan's decision Tuesday to hold steady on stimulus measures has left liquidity addicted markets feeling uncomfortable," said Ishaq Siddiqi, strategist at ETX Capital traders.

"Traders are worried about a market place with reduced liquidity against a backdrop of slowing growth in some parts of the world, notably China," he added.

In the background is concern tighter monetary conditions could cause some investors to pull out from emerging markets.

Also a focus of attention was a court case in Germany regarding the legality of one of the European Central Bank's controversial anti-crisis measures.

"The importance of the ECB's OMT policy should not be underestimated owing to its role as the core backstop underpinning all investor confidence within the eurozone," said Joshua Mahony, research analyst at Alpari trading group.

Germany's Constitutional Court was holding a final day of hearings to decide whether the ECB's "Outright Monetary Transactions" scheme is in line with German law or whether it breaches the central bank's mandate.

Ever since the ECB unveiled the OMT to buy up the sovereign debt of the euro area's most debt-wracked members last August, fears of a break-up of the single currency have indeed receded.

Europe's storm-battered financial markets have enjoyed a period of relative calm, without a single OMT ever being carried out.

In foreign exchange deals, the European single currency rose to $1.3359 from $1.3335 late in New York on Tuesday.

The dollar fell to 95.34 yen from 96.01 yen on Tuesday.

In trading on the London Bullion Market, the price of gold gained to $1,382.75 an ounce from $1,374.25 on Tuesday.

In European company news, shares in Vodafone slumped 5.73 percent to 181.00 pence in London after the British mobile phone giant said it had made a preliminary approach to Kabel Deutschland over a possible offer for the firm, Germany's biggest cable operator.

Kabel shares meanwhile soared 8.18 percent to 80.84 euros in Frankfurt.

In midday trade on Wall Street, stocks also fell with the Dow Jones Industrial Average shedding 0.06 percent and the tech-rich tech rich Nasdaq Composite index falling 0.25 percent.

Asian stock markets closed lower on Wednesday in holiday-reduced trade, as the Bank of Japan's refusal to unveil any fresh stimulus measures raised concerns about central banks' role in supporting the world's economies, dealers said.