Stock markets running out of steam

LONDON — The recent rally in global stock markets showed signs of running out of steam Tuesday amid concerns over China's economic growth and the impact of high oil prices on consumers and businesses.

Over the past few weeks, stocks have been buoyant as U.S. economic figures were upbeat and concerns over Europe's debt crisis eased after the European Central Bank gave banks emergency loans and Greece received a second massive bailout. Many stock indexes are trading at multi-month highs, while the main U.S. markets at their highest levels in nearly four years.

But investors appear skeptical that more gains can be sustained in the near term, especially as the scheduled newsflow is relatively light this week, in terms of economic data and central bank pronouncements.

"There seems to be an underlying feeling of caution at the moment as investors struggle to find reasons to increase this current rally further," said Simon Furlong, a trader at Spreadex. "The risk-on trading the markets have experienced recently, fuelled by liquidity and a more positive outlook for the U.S. economy seems to be losing some steam."

In Europe, Germany's DAX fell 1.2 percent to 7,071 while the CAC-40 in France was 1.3 percent lower at 3,532. The FTSE 100 index of leading British shares was down 1 percent at 5,903.

In the risk-averse trading environment, the euro also suffered, trading was 0.3 percent lower at $1.3191.

Wall Street was poised for a lower opening, too — Dow futures and the broader S&P 500 futures were 0.5 percent lower.

Earlier in Asia, sentiment was hit by news that house prices dropped in 45 Chinese cities in February, as the government implemented measures to cool property speculation. China's Shanghai Composite Index ended 1.4 percent lower at 2,376.84.

"Concerns about Chinese economic growth are resurfacing," said Neil MacKinnon, global macro strategist at VTB Capital.

Elsewhere in Asia, trading volume was low because Japan's markets were closed for a national holiday. Hong Kong's Hang Seng index fell 1.1 percent to 20,888.24 and South Korea's Kospi retreated 0.2 percent to 2,042.15.

Investors around the world are also keeping a close watch on developments in oil markets amid fears that rising prices may hamper the global econcomic recovery and stoke inflation.

On Tuesday, China raised the price of retail gasoline for the second time in two months. Though the benchmark New York rate was 63 cents lower at $107.46, prices remain at elevated levels.

————

Alex Kennedy in Singapore contributed to this report.