European stocks mostly rebounded on Wednesday after sharp losses the previous day over concerns about global stimulus, while traders also digested economic data and takeover activity.

London's FTSE 100 index of leading shares rose 0.11 percent to 6,346.85 points in afternoon deals following news that British unemployment fell in the three months to the end of April.

Frankfurt's DAX 30 index edged down 0.06 percent to 8,217.86 points and in Paris the CAC 40 grew 0.61 percent to 3,833.95.

The Madrid market jumped 1.69 percent but Milan sank 0.31 percent.

European stocks had fallen sharply on Tuesday as investors grew increasingly concerned that key central banks would step back from stimulus efforts that have been helping boost markets all year.

"Persisting fears about impending Federal Reserve tapering of asset purchases together with the Bank of Japan's decision Tuesday to hold steady on stimulus measures has left liquidity addicted markets feeling uncomfortable", said Ishaq Siddiqi, strategist at ETX Capital traders.

"Traders are worried about a market place with reduced liquidity against a backdrop of slowing growth in some parts of the world, notably China," he added.

In the background there is interest also in the possibility that the prospect of tighter monetary conditions could cause some investors to withdraw some short-term investment funds from emerging markets.

Also a focus of attention was a court case in Germany regarding the legality of one of the European Central Bank's controversial anti-crisis measures.

"The importance of the ECB's OMT policy should not be underestimated owing to its role as the core backstop underpinning all investor confidence within the eurozone," said Joshua Mahony, research analyst at Alpari trading group.

Germany's Constitutional Court is holding a final day of hearings to decide whether the ECB's "Outright Monetary Transactions" scheme -- which is credited with bringing the eurozone back from the brink of break-up last year -- is in line with German law or whether it breaches the central bank's mandate.

Ever since the ECB unveiled the OMT to buy up the sovereign debt of the euro area's most debt-wracked members last August, fears of a break-up of the single currency have indeed receded.

Europe's storm-battered financial markets have enjoyed a period of relative calm, without a single OMT ever being carried out.

In foreign exchange deals, the European single currency dropped to $1.3287 from $1.3335 late in New York on Tuesday.

The dollar increased to 96.57 yen from 96.01 yen on Tuesday.

In trading on the London Bullion Market, the price of gold gained to $1,377.25 an ounce from $1,374.25 on Tuesday.

In European company news, shares in Vodafone slumped 4.03 percent to 184.25 pence in London after the British mobile phone giant said it had made a preliminary approach to Kabel Deutschland over a possible offer for the firm, Germany's biggest cable operator.

Kabel shares meanwhile soared 10.05 percent to 82 euros in Frankfurt.

Wall Street also rose on Wednesday with the Dow Jones Industrial Average up 0.50 percent just after the opening bell and the tech rich Nasdaq gaining 0.60 percent.

Asian stock markets closed lower on Wednesday in holiday-reduced trade, as the Bank of Japan's refusal to unveil any fresh stimulus measures raised concerns about central banks' role in supporting the world's economies, dealers said.