German shares pared some initial gains on Tuesday, with mounting concerns over the outlook for Spanish banks capping the upside. Spanish 10-year bond yields remained at elevated levels on Tuesday after hitting a high of 6.53 in the previous session, intensifying worries about whether the nation can support ailing banks on its own.
Spanish Prime Minister Mariano Rajoy on Monday admitted the state was struggling to raise money on the debt market, but insisted the nation's banks would not need an international rescue.
The benchmark German DAX is currently up 26 points or 0.42 percent at 6,350, while France's CAC 40 and Switzerland's SMI are up about half a percent each. The U.K.'s FTSE 100 is little changed.
The dollar recovered some of its earlier losses against the euro after the Bank of Spain pointed to a continued decline in Spanish gross domestic product in the second quarter.
In stock- specific action, automakers Daimler and Volkswagen are rising 2-3 percent, while banks are subdued, with CommerzBank down 0.1 percent and Deutsche Bank declining 0.9 percent.
Moody's Investors Service today said in a report that the refinancing burden of unrated European leveraged buyouts remains challenging. With the refinancing peak remaining worrisome, at least a quarter of 254 companies, facing EUR 133 billion in LBO-related debt maturing through 2015 could default, the agency observed.
On the macroeconomic front, Germany's import price inflation slowed for the seventh consecutive month in April, with the headline index increasing 2.3 percent on an annual basis in the month, slower than the 3.1 percent growth seen in March, data released by the Federal Statistical Office showed.
Elsewhere, Asian stock markets rose across the board, with key benchmark indexes in Australia, China and Hong Kong rising more than a percent each, as speculation that China may soon launch a stimulus program to boost domestic demand countered negative sentiment over Spain's deteriorating financial situation.
Crude and copper are trading mixed, while the Dow futures point to a higher opening as trading resumes after a long weekend.
by RTT Staff Writer
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