European stock markets edged higher Tuesday following a mixed performance in Asia earlier, as investors eyed an expected interest rate cut from the U.S. Federal Reserve later. The FTSE 100 index of leading British shares was up 11.64 points, or 0.3 percent, to 4,289.20, while Germany's DAX was 65.01 points, or 1.4 percent, higher at 4,719.83. The CAC-40 in France rose 21.22 points, or 0.7 percent, to 3,206.88. Earlier, Asian stocks were mixed with Japan's Nikkei 225 stock average down 96.64 points, or 1.1 percent, to 8,568.02. Hong Kong's Hang Seng index was 83.26 points, or 0.6 percent, higher at 15,130.21. Most attention was focused on the U.S. central bank, which is widely anticipated to slash its key rate by at least a half a percentage point to 0.5 percent following repeated cuts since the financial crisis erupted last year. U.S. stock index futures pointed to a modest rebound on Wall Street from small losses Monday. Dow futures gained 11 points, or 0.1 percent, to 8,592, while S&P futures were up 1.8 points, or 0.2 percent, to 874.10. What the Fed says in its statement after the rate decision on the health of the world's largest economy - already in recession - and what measures beyond monetary policy it might take to boost growth will likely have more bearing on investors than the actual rate decision. With the Fed's key rate dropping ever closer to zero, the central bank is moving into uncharted territory. By boosting the quantity of money in the financial system, the Fed has engaged in so-called "quantitative easing" to provide economic relief. The Fed's balance sheet has ballooned to $2.2 trillion, from close to $900 billion in September, reflecting efforts to mend the financial system. "Hopefully the Fed will at least have the good grace to admit that it has long embarked on the path of quantitative easing, and might at least offer some more explicit," said Marc Ostwald, a strategist at Monument Securities. A host of earnings reports this week was cause for anxiety among many investors. Goldman Sachs Group Inc. is expected Tuesday to report its first quarterly loss since it went public in 1999 as a result of the global financial turmoil. Morgan Stanley reports results on Wednesday. "The possible cutting of interest rates will help in the short term, but there are too many uncertainties out there," said Peter Lai, investment manager at DBS Vickers in Hong Kong. "We're in a recession ... and people are wondering if other companies may need rescues." Earlier, several Asian markets showed some resilience late in the day. In Hong Kong and Shanghai, stocks opened in the red but bounced back modestly after the head of China's central bank said more rate cuts could be in the offing. Beijing, worried over China's cooling economy, has been rushing out a series of stimulus measures, including massive spending plans and looser fiscal policies. On Tuesday, Chinese central bank Gov. Zhou Xiaochuan suggested the government would continue along that path. "From this year to early next year, we will be facing pressure to cut interest rates, so we will cut gradually," he told reporters in Hong Kong. Mainland China's Shanghai's key index rose 0.5 percent to 1,975.01, and South Korea's Kospi edged up 0.3 percent to 1,161.56. Australia's benchmark index declined about 1 percent but Thailand's key SET index rose 1.9 percent to 445.31 as investors welcomed the selection of Abhisit Vejjajiva as the country's new prime minister bringing a measure of calm after six months of instability caused by anti-government demonstrations that included the takeover of Bangkok's two main airports. Overnight in New York, U.S. stocks fell back amid investor concerns about the alleged $50 billion fraudulent investment scheme led by investment manager Bernard Madoff. The Dow Jones industrial average finished down 65.15, or 0.75 percent, to 8,564.53. The Standard & Poor's 500 index lost 11.16, or 1.27 percent, to 868.57. European markets also closed lower. In currencies, the dollar fell 0.6 percent to 90.03 yen while the euro dipped 0.4 percent to $1.3647. Oil prices rose amid expectations that OPEC will announce a big production cut Wednesday. Light, sweet crude for January delivery was up 31 cents to $44.82 a barrel in electronic trading on the New York Mercantile Exchange. AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.

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