European stocks waver

European stock markets wavered in choppy trade Tuesday as the euro lost ground versus the dollar on persistent eurozone tensions with Spanish borrowing costs again testing dangerously high levels. Markets in London, Frankfurt and Paris struggled to find direction even after ratings agency Moody\'s lowered its outlook on Germany, but in Spain and Italy, the focal point for most trader worry these days, shares again suffered badly. In midday trade, London\'s benchmark FTSE 100 dipped 0.14 percent to stand at 5,526.20 points in afternoon trade. Frankfurt\'s DAX 30 rose 0.18 percent to 6,430.96 points and in Paris the CAC 40 lost 0.24 percent to 3,094.11 points. Madrid was down a hefty 2.24 percent and Milan slid 1.84 percent. Europe\'s main indices had lost between 2.0 and 3.2 percent on Monday over speculation that embattled eurozone Spain could soon require a full state bailout. In Tuesday trade, the euro dropped to $1.2096 from $1.2137 in New York late Monday. The European single currency had kicked off the week by striking a two-year low at $1.2067. The euro also reached 94.24 yen on Monday -- the lowest yen-level for almost 12 years. It recovered to stand at 94.63 yen on Tuesday. US stocks also wobbled lower Tuesday on mixed corporate earnings reports and eurozone worries with the Dow Jones Industrial Average down just 0.07 percent and the tech-rich Nasdaq up 0.03 percent in morning trade. \"Positive Chinese manufacturing data has managed to lift some of the gloom from the economic outlook,\" said Mike McCudden, head of derivatives at data provider Interactive Investor.  \"At the moment all eyes are on the eurozone and as it continues to lurch from one catastrophe to the next expect any bounce to be short lived. \"As Spain clearly cannot finance its debts while trying to stabilise the economy it is only a matter of time before we see a request for a formal bailout.\" Spain had to pay higher rates Tuesday to raise 3.05 billion euros ($3.72 billion) in short-term funds, coming under pressure again on the markets on concerns that Madrid will need a full sovereign debt bailout. The treasury said it sold 3-month bills at 2.434 percent, up from 2.362 percent at the last similar auction in late June, with 6-month bills rising sharply, to 3.691 percent from 3.237 percent. It said bids came to 9.0 billion euros, reflecting strong demand for the debt, which carries very high rates for such short maturities. Spain\'s long-term borrowing costs have soared in recent days to well above the danger line of 7.0 percent, hitting levels that forced Greece, Ireland and Portugal to seek EU-IMF bailouts. The yield or rate of return on the benchmark 10-year Spanish government bond was higher again Tuesday, at 7.563 percent. Compounding problems, debt-laden Catalonia, the second biggest Spanish region, will join the likes of Valencia and likely others to ask the federal government for funds, the region\'s finance minister told BBC radio on Tuesday. The eurozone crisis took another twist on Monday as Moody\'s made a first step toward stripping Germany of its coveted triple-A credit rating, cutting the outlook for Europe\'s largest and most pivotal economy to \"negative.\" Delivering a stark warning that no one is immune from the eurozone\'s rolling crisis, the ratings agency lowered Germany\'s credit outlook from \"stable\" to \"negative\" after the close of European trading. Top-rated The Netherlands and Luxembourg were similarly cut. Moody\'s said all three faced risks from Greece leaving the eurozone and from the need to stump up cash for potential bailouts for Spain and Italy. In Germany, the finance ministry immediately shot back by saying the country remained the \"eurozone\'s anchor of stability\". Dick Green at Briefing.com said: \"Germany isn\'t really of concern, but the agency understandably noted that rapidly deteriorating conditions in Spain and Greece have implications for Germany\'s financial health.\" Markets meanwhile won some relief from news that China\'s manufacturing activity contracted at its slowest pace in five months in July, indicating that Beijing\'s easing measures were beginning to take effect. Preliminary figures from HSBC\'s closely watched purchasing managers\' index (PMI), which gauges nationwide manufacturing activity, hit a five-month high of 49.5 in July, the British banking giant said in a statement.