FOMC will decide to reduce its $85 billion in monthly

European stocks mainly fell on Wednesday as investors braced themselves ahead of the release of minutes from the US central bank which could give clues on the winding down of its stimulus programme, dealers said.

In afternoon deals, London's FTSE 100 index of leading shares dropped 0.55 percent to stand at 6,417.75 points.

Frankfurt's DAX 30 dipped 0.14 percent to 8,288.10 points, while the CAC 40 in Paris went against the stream, adding 0.16 percent to 4,035.39 compared with Tuesday's closing values.

With the US economy showing signs of improvement, analysts say the Fed will likely slow its bond-buying programme.

European shares had already fallen on Monday and Tuesday, as speculation of a scale-back intensified.

"There is a growing belief that the FOMC will decide to reduce its $85 billion in monthly bond purchases at its 17-18 September meeting to somewhere in the region of $65 billion," Spreadex trader Max Cohen said.

The Federal Open Market Committee (FOMC) minutes are due for release at 1800 GMT.

Cohen's colleague, David White, added that the risk is "that the Fed delivers tapering at a pace faster than predicted. Any such process will likely upset the equity market and send treasuries into a spin".

Expectations of tapering have seen foreign investors in recent months repatriate some of the vast sums that poured into emerging economies since the lastest quantitive easing programme was unveiled in September 2012, in turn hitting currencies and equities.

In foreign exchange deals, the European single currency dipped to $1.3386 compared with $1.3417 late in New York on Tuesday, when it had touched a five-month high at $1.3452.

The dollar climbed to 97.48 yen from 97.26 yen.

Sterling rallied to 1.1725 euros and steadied against the dollar at $1.5691 having reached a two-month high point of $1.5696 on Tuesday.

Currencies in developing Asia meanwhile struggled, as concerns grow that the Federal will soon begin to unwind its massive stimulus policy, in a move which would divert cash back to the West.

Many investors are also anxious to see if higher US interest rates are in the offing, which would lessen the appeal of emerging markets.

India's rupee plunged to a new record low and Indonesia's rupiah and the Thai baht both faced more selling pressure.

Kathleen Brooks, research director at trading site Forex.com, said that "tonight's minutes are critical, any mention of the timing or composition of tapering could be considered hawkish, and thus dollar positive, which may exacerbate the decline in emerging markets foreign exchange in the coming days".

On the London Bullion Market, the price of gold fell to $1,360 an ounce from $1,372.50 on Tuesday.

Market sentiment was also hit this week after German finance minister Wolfgang Schaeuble said that crisis-hit Greece will need another rescue package after 2014.

"There will have to be another programme for Greece," Schaeuble said at an election campaign event near the northern city of Hamburg on Tuesday, according to media reports.

In the US, stocks fell in anticipation of the Fed release.

Five minutes into trade, the Dow Jones Industrial Average fell 0.23 percent, the broad-based S&P 500 shed 0.27 percent and the tech-rich Nasdaq Composite Index gave up 0.10 percent.

In company news, French utilities group Veolia Environnement on Wednesday saw its shares soar 7.1 percent to 11.33 euros after investment bank Morgan Stanley raised its recommendation for the company, saying it is time to buy the stock.

Danish wind power group Vestas also saw a boost to its shares, climbing 6.2 percent to 109.80 kroner, after announcing it has replaced its chief executive. 

The news came as the struggling group posted yet another quarterly loss.

On the bond market meanwhile, yields rose. Ten-year US bonds rose to 2.84 percent, while Germany's increased to 1.86 percent and Britain's climbed to 2.71 percent.

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