Global stock markets gave up much of their strong Monday gains as fears over European debt levels returned Tuesday.
On Monday, investors cheered a plan to give the euro a $1 trillion backstop. But the euphoria appears to be short-lived, as investors realized heavily indebted countries face huge challenges and still have to significantly scale back spending and programs.
Gold standard bars are piled up in this file photo. Bullion prices hit $1,218 US on Tuesday. (Karl Mathis/Associated Press) In Europe, the FTSE 100 index of leading British shares was down 84.80 points, or 1.6 per cent, at 5,302.62, while Germany's DAX fell 79.98 points, or 1.3 per cent, to 5,937.93. The CAC-40 in France was 56.41 points, or 1.5 per cent, lower at 3,663.88.
The Toronto Stock Exchange was one of the rare gainers, with the benchmark S&P/TSX Composite Index up 53.8 points in early trading to 12,001.7. Debt fears held back many sectors, but gold stocks managed to buoy the overall market as people fled for the safety of bullion.
Spot gold prices gained $17.90 US to $1,218.70 US. The Canadian dollar was down 0.17 of a cent to 97.46 cents US.
“Yesterday's burst higher is already looking short-lived amidst concern over a wide range of issues,” said Ben Potter, research director at IG Markets. “Without doubt when gains of five per cent or more are seen in a single day a degree of reversion is perhaps to be expected.”
The Dow Jones opened 65.7 points lower to 10,719.5. The tech-laden Nasdaq exchange was largely unchanged, shedding 3.3 points to 2,371.32.
"Progress has been made, but the whole sovereign debt looks very like a can of worms," said David Buik, markets analyst at BGC Partners.
With files from The Associated Press and The Canadian Press
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