European stock markets mixed before US Fed report

European stock markets were mixed on Wednesday, but most curbed two days of losses as investors awaited minutes of the US Federal Reserve's last policy meeting for clues on the outlook for interest rates.

An upbeat earnings report from the US group Alcoa helped to boost sentiment, meanwhile.

London's benchmark FTSE 100 index nonetheless dropped 0.30 percent to stand at 6,718.04 points at the close.

Frankfurt's DAX 30 edged 0.36 percent into the black however, at 9,808.20 points and the CAC 40 in Paris added 0.40 percent to 4,359.84.

In Madrid, the Ibex-35 gained 0.54 percent, and in Milan the FTSE Mib was 0.89 percent higher.

"European markets remain cautious... amid fears that equities have risen too far, too fast to justify their current valuations and that US interest rates will rise sooner than expected," commented Rebecca O'Keeffe, head of investment at stockbroker Interactive Investor.

"Investors will be hoping that June's Fed minutes, released later today, will provide some clarity and reassurance that (Federal Reserve chief Janet) Yellen can continue to hold sway over her more hawkish colleagues."

On foreign exchange markets, the European single currency rose to $1.3633 in closing deals, from $1.3611 late on Tuesday in New York.

The euro also rose to 79.57 pence from 79.45 pence. The pound was little changed against the dollar at $1.7130.

On the London Bullion Market, the price of gold climbed to $1,322.75 an ounce from $1,313 on Tuesday.

- Good news from Alcoa -

On Wall Street, US stocks got modest support from Alcoa's solid earnings report.

In early trading, the Dow Jones Industrial Average gained a slight 0.07 percent to 16,918.84 points.

The broad-based S&P 500 advanced 0.13 percent to 1,966.29, while the tech-rich Nasdaq Composite Index added just 0.09 percent to 4,395.44.

Alcoa unofficially kicked off second-quarter earnings season after markets closed on Tuesday with profits of $138 million, up from a loss of $119 million a year ago.

The company benefited from lower costs, and said aluminium demand was on track to increase seven percent in 2014.

Alcoa shares rose by 2.2 percent to $15.18 in early trades on Wednesday.

"Alcoa got earnings off to a good start overnight but all eyes will be set on the Fed minutes," CMC Markets analyst Jasper Lawler noted.

"Tomorrow will perhaps be the bigger day for US earnings with releases from Gap, Family Dollar and Chevron," he added.

Back in London, the Bank of England began its latest monthly meeting on Wednesday. The BoE is tipped to wrap up the gathering on Thursday by voting in favour of keeping its main interest rate at a record-low level of 0.50 percent.

"Markets are assuming that the Bank of England will resist a tightening of monetary policy," said Neil MacKinnon, economist at VTB Capital financial group.

"However, it is just a matter of time, in our view, before the BoE increases interest rates" owing to Britain's largely solid economic recovery.

Asian stock markets had lost ground earlier in the day, following a negative impulse from Wall Street on Tuesday and talk of a possible correction for global equities after their rally over the past few weeks.

China released data showing that inflation eased slightly in June after hitting a four-month high in May.