European stocks move higher in volatile trading

European stocks moved higher in volatile trading Tuesday despite Italy being forced to pay record rates at a bond auction and intense pressure on eurozone finance ministers to avert economic meltdown. London's benchmark FTSE 100 index gained 0.46 percent to 5,337 points despite Britain slashing its growth forecasts. In Paris the CAC-40 also rose 0.46 percent to finish the day at 3,026.76 points, while in Frankfurt the DAX 30 put on 0.95 percent to 5,799.91 points. In Paris the CAC 40 gained 0.31 percent to 3,022.39 points while Frankfurt's DAX 30 rose 0.35 percent to 5,765.42 points. After briefly going above $1.34, the euro stood at 1.3346 at 1700 GMT compared with 1.3318 late in New York on Monday. The dollar slid to 77.85 yen from 77.97 on Monday. Wall Street was also in positive territory near midday, despite American Airlines filing for bankruptcy protection. At a bond sale closely watched by investors worried that the country could need a bailout, Italy managed to raise 7.5 billion euros in a bond auction, falling slightly short of its upper target of 8.0 billion euros. However, borrowing rates shot up to a new high, breaking through the 7.0 percent warning threshold, with an inversion of the yield curve reflecting investor concern that the country could default. "It means that the markets perceive a serious risk of default in the short term," said Sergio Capaldi, bond strategist with Italy's Intesa Sanpaolo bank. Because time is risk, the interest rate on long-term loans is usually higher than rates on shorter term lending. The yield on Italian bonds maturing in 2014 shot up to 7.89 percent from 4.93 percent, while rates on those expiring in 2022 rose to 7.56 percent compared with 6.06 percent at the last similar operation -- causing a yield curve inversion. It is the first time recently that the yields have inverted on the Italian primary market, though the distortion began several days ago on the secondary market for already issued debt. Capaldi said that while the fears Italy would not find takers for its debt had not been realised, "the rates are at scandalous levels." "It's a price Italy cannot pay for more than a few quarters. All emissions at rates over 7.0 percent bring us closer to the moment Italy will need outside help," he said. A weekend report that Italy was to get an International Monetary Fund bailout -- later flatly denied -- had been taken positively by dealers on Monday, sending stocks and the euro surging on the week's first trading day. In Britain, stocks slid after the government slashed its growth forecasts before rebounding. The British economy is now expected to grow by 0.9 percent this year, about half the prior guidance for 1.7 percent growth. Growth in 2012 is now seen at 0.7 percent, about a quarter of the previous official forecast of 2.5 percent in March. Chancellor of the Exchequer Osborne announced that Britain will spend £30 billion (35 billion euros, $47 billion) extra on major infrastructure projects over the next 10 years to stimulate economic growth. Meanwhile, eurozone finance ministers were meeting under urgent pressure to stop the debt crisis from shattering the monetary union. The United States, IMF and Organisation for Economic Cooperation and Development (OECD) each issued urgent warnings in the hours leading up to the meeting that decisive action is essential to prevent global economic meltdown. The meeting comes after US President Barack Obama told top European officials on Monday that they must act decisively to avoid plunging the world into another downturn. Before their meeting several eurozone finance ministers said they expected they would approve unlocking 8.0 billion euros ($10.7 billion) in delayed aid for Greece, which needs the funds to avoid defaulting by mid-December. Upward momentum in US markets was tempered on Tuesday by American Airlines' decision to file for Chapter 11 bankruptcy protection and Fitch lowering its US rating outlook to negative after the close of markets on Monday. Nearing midday, the Dow Jones Industrial Average was up 0.67 percent to 11,599.95 points. The broader S&P 500 rose 0.72 percent to 1,201.18 points, while the tech-heavy Nasdaq edged up 0.06 percent to hit 2,528.88 points. Asian stock markets rallied Tuesday on optimism that Europe's finance leaders were close to a plan to tackle debt despite a warning that the crisis could spark another depression. Traders also reacted to a strong cue on Wall Street, which surged after a record post-Thanksgiving shopping weekend. Tokyo jumped 2.30 percent and Seoul surged 2.27 percent.