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World stocks mixed amid Spain fears

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People walk by an electronic stock board of a securities firm in Tokyo, as Japan's Nikkei 225 index fell by one per cent (AP)

People walk by an electronic stock board of a securities firm in Tokyo, as Japan's Nikkei 225 index fell by one per cent (AP)

People walk by an electronic stock board of a securities firm in Tokyo, as Japan's Nikkei 225 index fell by one per cent (AP)

World stock markets were mixed as enthusiasm for a European plan to rescue Spain's teetering banks turned to scepticism.

An offer by the 17 countries that use the euro to loan Spain up to 100 billion euro (£81 billion) to revive banks crushed by bad property loans was initially met with euphoria, driving markets up on Monday.

But concerns have quickly grown that the rescue is a sticking plaster which will not stop Spain's severe economic problems 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% to 5,440.85, Germany's Dax added 0.5% to 6,152.13 and France's Cac-40 was 0.4% higher at 3,055.72.

Wall Street appeared to be headed for a mixed opening. Dow Jones industrial futures rose 0.6% to 12,381 while S&P 500 futures fell 1.1% to 1,307.50.

Asia shares fell as investors took cues from a choppy day of trading in the US that ended with losses on major stock indexes.

Japan's Nikkei 225 index lost 1% to close at 8,536.72, South Korea's Kospi dropped 0.7% to 1,854.74 and Hong Kong's Hang Seng was 0.4% lower at 18,872.56. Mainland Chinese shares lost ground, with the benchmark Shanghai Composite Index shedding 0.5% to 2,289.79 and the Shenzhen Composite Index lost 0.4% 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 confirmed on Monday that the country's recession is deepening. The economy contracted at a quarterly rate of 0.8 % 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 on Sunday, when Greece holds an election that could determine whether Athens will remain in the euro.

PA