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World stock markets were mixed Tuesday as enthusiasm for a European plan to rescue Spain’s teetering banks turned to skepticism.
An offer by the 17 countries that use the euro to loan Spain up to (EURO)100 billion ($125 billion) to revive banks crushed by bad real estate loans was initially met with euphoria, driving markets up Monday.
But concerns have quickly grown that the rescue is a band aid that won’t prevent Spain’s severe economic problems from getting worse. A further deterioration in Spain’s situation would intensify the broader European debt crisis that is dragging on world growth.
European stocks rose in early trading after slumping a day earlier. Britain’s FTSE 100 inched up 0.2 percent to 5,440.85. Germany’s DAX added 0.5 percent to 6,152.13 and France’s CAC-40 was 0.4 percent higher at 3,055.72.
Wall Street appeared headed for a mixed open. Dow Jones industrial futures rose 0.6 percent to 12,381 while SP 500 futures fell 1.1 percent to 1,307.50.
Asia shares fell as investors took cues from a choppy day of trading in the U.S. that ended with losses on major stock indexes.
Japan’s Nikkei 225 index lost 1 percent to close at 8,536.72. South Korea’s Kospi dropped 0.7 percent to 1,854.74 and Hong Kong’s Hang Seng was 0.4 percent lower at 18,872.56.
Mainland Chinese shares lost ground, with the benchmark Shanghai Composite Index shedding 0.5 percent to 2,289.79. The Shenzhen Composite Index lost 0.4 percent to 942.18.
Spain became the fourth European nation to seek a rescue, after Greece, Portugal and Ireland. Some investors fear it is only a matter of time before Italy becomes the next country to ask for help.
Italy’s government on Monday confirmed that the country’s recession is deepening. The economy contracted at a quarterly rate of 0.8 percent in the first three months of the year, the worst contraction in three years and double Spain’s rate.
Some of the uncertainty spooking markets might be put to rest Sunday, when Greece holds an election that could determine whether Athens will remain in the euro.
Linus Yip, a strategist at First Shanghai Securities in Hong Kong, said that European financial institutions and other parties with an interest in the outcome had time to prepare and so the election might not destabilize markets.
“I think it will be OK. You can see every party is already doing the emergency planning, the European Central Bank is preparing,” he said. “The market has regained confidence gradually. The euro had a good rebound last week.”
Still, markets remained jittery over China’s economic slowdown. A large steelmaker in China, Baoshan Iron Steel, said it lowered steel prices as demand from makers of appliances and cars slowed. Shanghai-listed Baoshan fell 3.3 percent.
The news sent other Asian steelmakers lower. Japan’s Nippon Steel Corp. sank 2.9 percent and South Korea’s POSCO fell 1.9 percent.
Shares in Chinese environmental protection, steel and coal mining weakened, while property rose. Poly Real Estate, China’s second-largest listed developer, gained 4 percent.
“Investors are expecting the authorities to relax controls on the real estate market,” said Guo Yanhong, an analyst at Huachuang Securities based in Beijing.
Qantas Airways Ltd. soared 10.8 percent in Sydney after Dubai-headquarters Emirates said it had talked to the Australian flag carrier about a commercial partnership, possibly a code-share arrangement.
Benchmark oil for July delivery was down 79 cents to $81.89 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.40 to finish at $82.70 per barrel in New York on Monday.
Among currencies, the euro rose to $1.2506 from $1.2498 late Monday in New York. The dollar rose to 79.59 yen from 79.44 yen.
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