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| NYC - Rockefeller Center: Associated Press Building - News (Photo credit: wallyg) |
Stocks have risen in recent weeks as the U.S. Federal Reserve and monetary authorities in other major economies announced measures to support economic activity. The European Central Bank unveiled a new plan to restore investor confidence in the government finances of the 17-country eurozone.
The latest indicators, however, suggest the global economy is still slowing down and will take some time to recover.
On Monday, Germany's Ifo index of business confidence fell for a fifth consecutive month, evidence that even the continent's largest and so far strongest economy is suffering headwinds.
"The reality of weak growth and underlying structural tensions is coming back to haunt markets," said Mitul Kotecha, strategist at Credit Agricole CIB.
By late morning in Europe, the FTSE 100 index of leading British companies fell 0.6 percent to 5,818.09 and France's CAC 40 dropped 1.3 percent to 3,484.89. Germany's DAX shed 0.7 percent to 7397.37. Wall Street was poised to fall on the open — Dow futures were down 0.4 percent to 13,450 while the broader S&P 500 futures dropped 0.5 percent to 1,444.90. Asian markets closed lower.
Looking ahead, Europe's debt crisis will remain a point of focus for investors. Spain is due to unveil a new series of cost-cutting measures and structural reforms that could pave the way for a demand for financial aid from its fellow eurozone countries.
Spanish stock and bond markets have been volatile in recent days as hopes that Madrid will apply for the aid alternated with concern that it was delaying the move.
On Friday, the country will also release a final estimate of the financing needs of its weakest banks. The figures will help the government determine how much of an existing €100 billion ($130 billion) eurozone rescue loan — earmarked for the banks — it should use. ... Continue to read.
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