Monday’s so-called “relief rally” dissipated at the opening bell on Wall Street on Tuesday, with major market indexes off slightly in morning trading after gaining 3 percent the day before.
In Europe, stocks were down slightly, after a rally in Asia, as the European Central Bank’s departing chief warned of an increasing risk of financial contagion from the euro zone debt crisis and officials recommended that Greece receive additional bailout funds from international lenders.
The broad European market was off less than 1 percent in late trading. Jean-Claude Trichet, who is stepping aside from the top E.C.B. post to make way for Mario Draghi, told the European Parliament in Brussels on Tuesday that the financial crisis “has reached a systemic dimension,” Bloomberg News reported.
“Sovereign stress has moved from smaller economies to some of the larger countries,” Mr. Trichet said. “The crisis is systemic and must be tackled decisively.”
Mr. Trichet was speaking in his capacity as head of the European Systemic Risk Board, a body created last year to ensure supervision of the European Union financial system. He steps down as E.C.B. chief on Nov. 1.
In morning trading, the Standard Poor’s 500-stock index and the Dow Jones industrial average were up about 0.1 percent.
Investors both in Europe and on Wall Street were awaiting the outcome of a vote in Bratislava, where Slovakian lawmakers debated Tuesday on whether to back an expansion of the European Financial Stability Facility. The Slovak government is divided on the bailout mechanism, and a rejection could, at the very least, further complicate plans to shore up the euro zone.
On Tuesday afternoon, the so-called troika, made up of teams from the European Commission, the E.C.B. and the International Monetary Fund, announced that it was recommending that Greece receive 8 billion euros, or $10.9 billion, of financial support.
The embattled government in Athens cannot expect to reach its deficit targets for this year, the troika inspectors concluded, but they said it appeared that measures agreed for 2012 made the country’s goals attainable.
“Overall, the authorities continue to make important progress, notably with regard to fiscal consolidation,” the troika’s review found.
On Monday, the European Council president, Herman Van Rompuy, said a European Union summit meeting on the debt crisis would be delayed by a week to Oct. 23 to give the bloc time “to finalize our comprehensive strategy on the euro area sovereign debt crisis covering a number of interrelated issues.”
Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France have promised a plan to recapitalize European banks before a Group of 20 summit meeting on Nov. 3.
“The sense of urgency among European officials that became apparent two weeks ago appears to be gathering steam,” analysts at DBS wrote in a note to clients. “One can’t be unhappy about that.”
In afternoon trading, the Euro Stoxx 50 index, a barometer of euro zone blue chips, was down 0.3 percent, while the FTSE 100 index in London was down a 0.2 percent. Energy companies posted the largest declines as oil prices fell.
“The pressure on euro zone officials has ratcheted higher, and risks of failure are now too significant to jeopardize with half measures,” analysts at Crédit Agricole CIB said. “Weekend promises of banking sector capitalization by Germany and France have helped but will not be enough should such promises prove empty.”
Asian shares were higher across the board. The Tokyo benchmark Nikkei 225 stock average rose 2 percent. The Sydney market index S. P./ASX 200 rose 0.6 percent.
Chinese stocks initially rose a day after the country’s sovereign wealth fund bought shares in China’s four main banks in a show of support , but the Shanghai composite index gave up all but 0.2 percent of the gain by the end of trading.
The Hang Seng index in Hong Kong also pared an early surge of more than 4 percent but ended the day up 2.4 percent.
The dollar was higher against major European currencies. The euro slipped to $1.3597 from $1.3642 late Monday in New York, while the British pound fell to $1.5628 from $1.5668. The dollar climbed to 0.9105 Swiss francs from 0.9037 francs. But the U.S. currency fell to 76.62 yen from 76.68 yen.
American crude oil futures for November delivery fell 0.6 percent to $84.89 a barrel. Comex gold futures fell 0.6 percent to $1,661.60 an ounce.
David Jolly reported from Paris and Sei Chong reported from Hong Kong. Stephen Castle contributed from Brussels.
Article source: http://feeds.nytimes.com/click.phdo?i=bfc0204b4572d738c61a2286993d184b
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