EUROPE'S main stock markets mostly treaded water on Tuesday as traders digested better-than-expected German investor sentiment data and an all-important US Federal Reserve policy meeting got underway. London's FTSE 100 index of leading shares climbed 0.69 per cent to end at 6,374.21 points while in Frankfurt the DAX 30 index added 0.17 per cent to close at 8,229.51 points. However in Paris the CAC 40 dipped 0.08 per cent to finish at 3,860.55 points. Milan was flat and Madrid rose 0.54 per cent. "The markets have the Fed meeting in their sights and nothing else seems to have the power to move them," said analyst Andrea Tueni at Saxo Bank. Financial markets have been unsettled in recent weeks as investors speculate on whether the Fed will soon begin to taper its $US85 billion ($A89.44 billion) -a-month quantitative easing program, which helped to fuel a global stocks rally. On Tuesday, data showed housing starts rose by a less than expected 6.8 per cent in May, while consumer prices rose a modest 0.1 per cent, which Wall Street apparently took to indicate the Fed would continue stimulus at its current rate. In midday trading on Tuesday, with the Dow Jones Industrial Average rose 0.81 per cent to 15,302.80 points, while the broad-based S&P 500 added 0.67 per cent to 1,650.08 points, and the tech-rich Nasdaq Composite Index increased 0.84 per cent to 3,481.11 points. Asian equity markets meanwhile mostly fell on Tuesday, with traders sitting on the sidelines as they awaited the Federal Reserve's plans for its stimulus program. An improvement in German investor sentiment also helped European markets. "European markets have continued to find support ... with a small beat on the German ZEW survey propping up stocks," said Matt Basi, head of UK sales trading at CMC Markets. German investor sentiment rose slightly in June, on firming hopes for a gradual recovery in Europe's biggest economy in the second half of the year, the ZEW economic institute said on Tuesday. Its closely watched index rose 2.1 points from May to 38.5. This was better than expected by analysts questioned by Dow Jones Newswires, who had forecast an index of 38.1. "The financial market experts are sticking to their assessment: The German economy is likely to gain momentum in the second half of 2013," said ZEW president Clemens Fuest in a statement. The survey results indicate, however, that the economic recovery will proceed timidly. Almost half of respondents expect no significant economic impetus in the next half-year. In foreign exchange deals on Tuesday, the European single currency rose to $1.3401 from $1.3367 late in New York on Monday. The dollar increased to 95.29 yen from 94.46 yen on Monday. On the London Bullion Market, the price of gold fell to $1,361.08 an ounce from $1,384.75 on Monday. Investors were tracking closely also the bond markets amid worries over rising yields. Spain's short-term borrowing costs climbed sharply on Tuesday as the Treasury raised 5.038 billion euros ($A7.10 billion) in an auction of six- and 12-month bills, reflecting renewed investor concern over the ability of the recession-hit country to repay its debts. The Treasury sold 1.087 billion euros' worth of six-month bills with an average yield of 0.821 per cent, up from 0.492 per cent from the last similar auction held on May 14.