European Stocks Cautious on US Economic Concerns [VIDEO]

European markets mostly dropped in the opening minutes of trade as the unexpected weakness in US economic growth in the fourth quarter sparked global economic concerns.

The UK's FTSE 100 fell 0.4 percent while Spain's IBEX dropped 0.5 percent. France's CAC-40 and Germany's DAX slipped 0.2 percent each. In Italy, FTSE MIB gained 0.3 percent.

The pan-European FTSEurofirst 300 index reversed early losses to pick up 0.05 percent.

The single currency eased moderately against dollar, trading at about $1.35.

Asian markets had ended mixed earlier as traders looked to cut profits from the recent rallies on the final day of the month, amid domestic earnings reports and US economic data.

Japan's Nikkei average index closed 0.22 percent higher to 11138.66 while South Korea's benchmark KOSPI was down 0.13 percent to 1961.94. In Australia, the S&P/ASX 200 slipped 0.37 percent to 4878.80.

China's Shanghai Composite Index gained 0.12 percent to 2385.42. Hong Kong's Hang Seng was down 0.42 percent to 23721.49 towards close.

Macroeconomic news from the world's largest economy dominated global market sentiments. Following the Gross Domestic Product (GDP) figures that showed a surprise contraction in the final months of 2012, the Federal Reserve's Open Committee opted to hold its interest rates close to zero and continue its asset purchase plan.

Traders are now awaiting the weekly jobless claims data expected later in the day and the bigger, monthly non-farm payroll figures set for release before the weekend.

"Jobless claims fell by 5k in the week to Jan 19 to a five-year low of 330k. However, this decline is likely to have reflected seasonal shifts in activity near the turn of the year," said Jonathan Thomas, Senior Economist at Lloyds Bank.

"We expect today's release to point to a small 20k pickup which is consistent with the ongoing strengthening of the US labour market".

In Europe, more uncertainty was seen in the eurozone plan to force banks to ringfence their trading operations. According to a Financial Times report, after France, Germany also prefers to limit the plan to separating some proprietary trading.

German retail sales, unemployment and consumer price index data are set for release during the day.

Meanwhile a report from the London-based research firm Gfk NOP showed that UK consumer confidence picked up in January, as Britons turned positive on the economic outlook. The index improved to -26 from December's -29, beating analysts' expectations.

Official data from Japan showed that the country's industrial output grew less than expected in December, by 2.5 percent, but indicated improvement in conditions. A survey of companies also suggested that the upward trend could continue, further reinforcing speculation that the Japanese economy could be recovering from its recent slump.

Domestic corporate earnings news weighed on trading sentiments in Asia. Japanese financial firms Sumitomo Mitsui Financial Group gained 5.16 percent after the firm reported a 34 percent rise in profit between April and December. Shares of the videogame firm Nintendo were down 5.13 percent after the company cut its full year sales forecast.

In Hong Kong, Angang Steel traded lower after the company warned of bigger losses in 2012 compared to the previous year. Oil giant Cnooc fell after posting a 2013 production estimate that failed to meet expectations.