Stocks struggle amid mounting global woes

Global stocks struggled on Wednesday, as investors fretted over the global impact of the eurozone crisis and poor US earnings but sentiment was partly boosted by a new Spanish austerity package. London’s FTSE 100 index of top companies slid 0.31 per cent to 5,646.63 points and in Paris the CAC 40 fell 0.26 per cent to 3,167.08 but Frankfurt’s DAX 30 index eked out an 0.11-per cent gain to stand at 6,445.12 points. Madrid bounced into positive territory as dealers welcomed the Spanish government’s vast 65-billion-euro ($80-billion) austerity package aimed at stabilising the public finances. The IBEX 35 index rose 0.83 per cent to 6,782.60 points. However, Italy’s stock market fell on persistent worries that debt-laden Rome may have to tap a eurozone rescue fund. The FTSE Mib index was down 0.15 per cent at 13,847.51 points. US stock markets edged lower at the open, continuing the euro and data-inspired drop seen the day before as markets await the latest news from the Federal Reserve. The major indexes fell into the red amid lingering doubts about a bailout plan for Spain, weak US business confidence figures and the expectation of mediocre earnings. An hour after the open, the Dow Jones Industrial Average was down 0.35 percent, or 44.84 points, to 12,608.28. The Nasdaq was down 0.27 percent, 7.86 points, to 2,894.47. The S&P 500 stood at 1,340.62, down 0.85 points, or 0.06 percent. Markets were also looking ahead to minutes from the Federal Reserve’s most recent policy meeting, which will be released at 1800 GMT. “Global growth storm clouds continue to gather,” commented dealer Jonathan Sudaria at trading group Capital Spreads. The euro meanwhile clawed its way back to $1.2268. That compared with $1.2251 in New York late on Tuesday, when it had slumped to $1.2235 - the lowest point since July 1, 2010. In Berlin, Germany’s finance minister pressed the country’s top court to rule quickly on legal challenges to euro crisis-fighting tools. “We have asked the court to decide as quickly as possible because we are in an extraordinarily critical situation. The risk of contagion to the whole eurozone is very high,” minister Wolfgang Schaeuble told German radio. Mike McCudden, head of derivatives at Interactive Investor, said: “It’s risk-off time once again as the latest batch of US earnings brought home the impact of depleted confidence and a slowing global economy. “This will no doubt usher in yet another round of (stimulus) chatter but in the face of continued eurozone woe, with leaders evidently not in a hurry to get the job done, investors will feel safer investing their cash under the mattress.” Investors remained sceptical about an agreement by eurozone finance ministers to channel 30 billion euros this month to Spanish banks and give Madrid an extension to a deadline to cut its public deficit. Market sentiment was also battered on Tuesday after Italian Prime Minister Mario Monti said that Rome might one day ask for the eurozone rescue fund to intervene in its bond market in order to ease his country’s borrowing costs. “It is very difficult to say that Italy will never need help from one fund or another and caution compels me not to talk about such things,” Monti said, having previously insisted that Rome did not need such an intervention. Monti stepped down as finance minister on Wednesday to be replaced by the current deputy minister Vittorio Grilli, but signalled he would keep a tight grip on economic policy. Asian markets were mixed on Wednesday as investors paused for breath following recent volatile trade.