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Europe stocks gain slight rebound amid Iraq fears

HONG KONG/LONDON--European stock rose on Tuesday as investors took their cue from slender gains on Wall Street before this week's U.S. Federal Reserve policy meeting, but gains were capped by Iraq fears.

In late morning deals, London's FTSE 100 index of top companies rose 0.28 percent to 6,773.53 points.

Frankfurt's DAX 30 advanced 0.84 percent to 9,967.67 points and in Paris the CAC-40 index gained 0.55 percent to 4,534.92 compared with Monday's close.

“European stock markets are staging a mild rebound following recent weakness on the back of the Iraq conflict,” said ETX Capital analyst Daniel Sugarman.

“Traders are using the recent selloff as an excuse to snap up stocks at lower prices.”

All three major European indices had fallen on Monday after Islamist insurgents swept further into Iraq.

Sentiment was also spooked after Russia cut gas supplies to Ukraine.

Asia Mixed as Traders

Watch Iraq, Fed

Asian markets were mixed Tuesday, following a tepid lead from Wall Street ahead of a U.S. Federal Reserve policy meeting, while oil edged down a touch from nine-month highs as traders nervously watch the crisis in Iraq.

The dollar nudged a little higher against the yen after the previous day's sell-off but the uncertainty caused by events in the Gulf kept gains to a minimum.

Tokyo closed 0.29 percent, or 42.68 points, higher to finish at 14,975.97 after sinking more than one percent on Monday, while Seoul gained 0.40 percent, or 7.96 points, to 2,001.55.

But Sydney gave up 0.21 percent, or 11.6 points, to end at 5,400.7 while Shanghai slipped 0.92 percent, or 19.29 points, to 2,066.70. Hong Kong slid 0.42 percent, or 97.08 points, to 23,203.59.

With few economic catalysts to drive trade, Iraq has dominated investors' attention as militants sweep across the country, taking over key cities and heading for Baghdad.

On Monday the jihadists battled government forces for control of a strategic northern town, while U.S. officials considered using drone strikes against the rebels.

All Eyes on Fed Chief Yellen

On Wall Street the three main share indexes ended lower last week but edged up slightly Monday, helped by a better-than-expected rise in U.S. industrial production.

The Dow was up 0.03 percent, the S&P 500 tacked on 0.08 percent and the Nasdaq rose 0.24 percent.

Attention will now turn to the Fed's policy meeting that wraps up on Wednesday.

Expectations are for the bank to cut a further US$10 billion from its monthly stimulus spending and keep interest rates at record lows. Investors are more interested in what chief Janet Yellen has to say about future policy.

Gold fetched US$1,265.00 an ounce at 1045 GMT compared with US$1,280.00 late Monday.

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