BANGKOK – Asian stock markets fell Tuesday as criticism by ratings agencies sparked wariness over a historic plan by the European Union to bind their economies closer together in an effort to fix a massive debt crisis.

Benchmark oil fell below $98 per barrel while the dollar was steady against the euro and the yen.

Japan’s Nikkei 225 fell 1.4 percent to 8,529.14. South Korea’s Kospi gave up 1.6 percent to 1,868.66. Hong Kong’s Hang Seng lost 1.3 percent to 18,341.16 and Australia’s S&P/ASX 200 dropped 1.5 percent to 4,189.30. Benchmarks in mainland China, Singapore, Taiwan and Indonesia also fell. Malaysia rose.

Markets rallied on Friday when the EU adopted a new fiscal pact meant to prevent a repeat of the financial fiasco that is now sweeping across countries that use the euro.

But that optimism dried up Monday, when credit rating agencies Moody’s and Fitch both said the deal was insufficient and would not materially ease debt pressure in Europe. Moody’s warned that it will review all EU governments’ ratings for possible downgrades in early 2012.

“Following the comments from Moody’s and Fitch, we expect to hear from S&P again soon for some post-summit comments. We already know S&P has France on ratings watch and may strip it of its AAA credit rating,” Stan Shamu of IG Markets in Melbourne said in a report.

Under the deal, all 17 countries that use the euro agreed to allow a central European authority to oversee their future budgets and impose tighter controls on spending. They also agreed to automatic penalties if countries spend too much.

But Moody’s said the pact does not address Europe’s immediate problem: the crushing debt loads of some nations and their rising borrowing costs.

High-tech shares slumped, tracking losses by industry bellwether Intel Corp., which fell 4 percent in New York after the chip-maker said its fourth quarter revenue will be lower than expected because flooding in Thailand has disrupted the supply of components.

South Korea’s Hynix Semiconductor, the world’s second-largest memory chip maker, lost 2.5 percent. Taiwan’s Acer Inc., the world’s third-largest personal computer maker, fell 1.3 percent.

Wall Street traded lower Monday. The Dow closed down 1.3 percent at 12,021.39, a loss erased nearly all of the Dow’s gains from last week. The S&P 500 lost 1.5 percent to close at 1,236.47. The Nasdaq composite index dropped 1.3 percent to 2,612.26.

Benchmark oil for January delivery fell 3 cents to $97.74 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.64 to finish at $97.77 per barrel on the Nymex on Monday.

In currency trading, the euro was unchanged from $1.3186 late Monday in New York. The dollar was slightly up at 77.92 yen from 77.91 yen.

TWO THUMBS DOWN: Stocks fell Monday as two big credit rating agencies criticized a deal between European leaders last week that is aimed at easing the region’s debt crisis. Fitch said the deal to bind Europe’s budgets more closely will make little difference, and predicted a deep recession there. Moody’s said it will reconsider the ratings of all European Union nations in the first quarter of 2012.

STOCKS PLUNGE: Investors delivered a negative verdict as well, sending stocks sharply lower all day. The Dow Jones industrial average lost 163 points.

WHAT’S MISSING: The deal gives a central European authority more power to punish nations that overspend. That might prevent a future crisis, but it doesn’t address Europe’s immediate problem: some countries’ crushing debt loads and spiraling borrowing costs.

U.S. stocks fell Monday after Moody’s Investors Service said last week’s European fiscal pact will not deter it from reconsidering the credit ratings of all European Union nations.

The Dow Jones industrial average fell 170 points in the first hour of trading. The euro weakened against the dollar and the yields on Italian and Spanish government bonds rose as investors became more nervous about holding the debt of those countries. European stock indexes fell broadly.

Moody’s said that last week’s summit of European leaders produced “few new measures” and that Europe’s financial crisis remains in a “critical and volatile stage.”

The 17 nations that use the shared currency and the region in general remains “prone to further shocks and the cohesion of the euro under continued threat,” Moody’s said. As a result, the agency said it would still review the creditworthiness of European countries in the first three months of 2012.

The warning from the credit rating agency deflated optimism about last week’s pact, which called for tougher fiscal discipline in countries the euro and greater oversight of national budgets by a central authority.

Yields on Italian and Spanish bonds rose back toward dangerously high levels. The yield on the benchmark Italian 10-year bond rose 0.41 percentage point, a large move, to 6.64 percent. Spain’s main bond yield rose a quarter point to 5.90 percent. Greece and Portugal were forced to seek bailouts from their creditors when their bond yields approached 7 percent.

U.S. stocks fell broadly, with declines for all 30 stocks in the Dow Jones industrial average and all 10 industry groups in the Standard & Poor’s 500 index. The Dow’s biggest lower was Intel Inc., which sharply reduced its revenue outlook because of supply chain problems.

Financial stocks fell sharply on fears that big banks could be affected by more turmoil in the European financial system. Bank of America Corp. fell 3.8 percent, the most in the Dow. JPMorgan Chase & Co. lost 2.7 percent, Morgan Stanley 5.5 percent.

The Dow fell 171 points, or 1.4 percent, to 12,013 in the first hour of trading. Intel Corp., fell 3.8 percent after the chipmaker said a shortage of hard drives will limit shipments, pushing its fourth-quarter revenue far below what Wall Street had expected.

The Standard & Poor’s 500 index fell 22 points, or 1.8 percent, to 1,233. All 10 of its industry groups lost ground. The Nasdaq composite index dropped 51 points, or 1.9 percent, to 2,596.

European markets were sharply lower, after soaring late last week on optimism about a summit aimed at solving the region’s debt crisis.

Moody’s noted that last week’s pact does not address Europe’s root problem: The heavy debt loads of many nations and their rising borrowing costs. Greece, Portugal and Ireland have had to accept bailouts. Italy and Spain are teetering because their debts scare investors, who in turn ratchet up their borrowing costs.

Stocks in Spain and Italy led European markets lower. Spain’s IBEX 35 fell 2.6 percent, Italy’s FTSE MIB 2.7 percent. Germany’s DAX 2.4 percent.

In corporate news, Endo Pharmaceuticals jumped 5 percent after federal regulators approved a new form of one of its pain medications, extending its patent rights over the drug.

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Follow Daniel Wagner at www.twitter.com/wagnerreports

PARIS – Enthusiasm for riskier assets such as stocks and the euro faded Monday as investors worried that Europe’s new pact aimed at fixing the continent’s debt crisis would be insufficient.

Markets had rallied on Friday, when the European Union adopted a new fiscal pact meant to prevent a repeat of the financial fiasco that is now sweeping across countries that use the euro. But that optimism quickly dried up as traders sought more support for European financial markets in the short-term as well.

Credit rating agency Moody’s said last week’s summit “offers few new measures.”

“The announced measures therefore do not change Moody’s previously expressed view that the crisis is in a critical and volatile stage,” Moody’s said, warning that it still intends to review all EU governments’ ratings for possible downgrades during the first three months of 2012.

Under the deal announced in Brussels Friday, all 17 countries that use the euro agreed to allow a central European authority to oversee their future budgets and impose tighter controls on spending. They also agreed to automatic penalties if countries spend too much.

Europe’s new “fiscal compact” also calls for the launch of a permanent bailout fund for euro nations in 2012 — a year ahead of schedule — and an additional euro200 billion ($267 billion) to the International Monetary Fund for a separate emergency fund for countries in crisis. National central banks will provide the money to the IMF.

Analyts warn that the deal doesn’t help cut existing debt, which has caused Greece, Ireland and Portugal to need bailouts and is threatening Italy and Spain.

That loose end brought into focus the future monetary policy of the European Central Bank, and whether it would be willing to buy enough national bonds from troubled countries to keep interest rates down. The ECB indicated last week that it would not.

“The (EU) measures may not be sufficient for markets, with disappointment at the lack of ECB action in terms of stepping up to the plate as lender of last resort still weighing on sentiment,” said Mitul Kotecha, analyst at Credit Agricole CIB.

Britain’s FTSE 100 fell 0.5 percent to 5,500.94. Germany’s DAX dropped 1.8 percent to 5,878 and France’s CAC-40 lost 1.2 percent to 3,133. Italy’s main stock index fell 1.9 percent while its bond yields rose sharply.

Wall Street also headed for a lower opening, with Dow Jones industrial futures dipping 0.4 percent to 12,090 and S&P 500 futures down 0.5 percent at 1,247.50.

Although Italy managed to raise euro7 billion ($9.4 billion) in an auction of 12-month bonds, its yields on the secondary market — where the issued bonds are then traded freely — continued to rise.

It’s 10-year bond yield was up 0.49 of a percentage point at 6.72 percent, not far from the 7 percent level that is considered unsustainable in the longer term. The rise in the yields indicates investors are more worried that the country might eventually default.

Nationwide strikes hit Italy as unions protested against the austerity measures meant to boost confidence in the country’s financial future.

In Greece, international austerity inspectors arrived for talks on a second rescue loan package agreed weeks ago but not yet finalized. Officials from the European Union, the European Central Bank and the International Monetary Fund are due to hold meetings at the finance ministry later Monday.

Asian stocks mostly closed higher, as they caught up with the gains made in Europe and the U.S. on Friday.

Japan’s Nikkei 225 index jumped 1.4 percent to close at 8,653.82. South Korea’s Kospi added 1.3 percent to 1,899.76 and benchmarks in Singapore, Taiwan, Australia and Indonesia also rose.

Hong Kong’s Hang Seng swung from early gains to end trading in the red, albeit marginally, at 18,575.66. China’s Shanghai Composite Index fell 1 percent to 2,291.54 as a three-day economic conference of Chinese leaders got under way.

Benchmark oil for January delivery was down $1.22 to $98.19 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.07 to finish at $99.41 per barrel on the Nymex on Friday.

In currencies, the euro fell to $1.3270 from $1.3370 late Friday in New York. The dollar rose to 77.66 yen from 77.54 yen.

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Pamela Sampson in Bangkok contributed to this article.

HONG KONG – Asian stocks tumbled Friday as investors grew increasingly pessimistic that European leaders would conclude a crucial summit without finding a solution radical enough to fix the continent’s debt crisis.

Crude oil fell to near $98 while the dollar strengthened against the euro but weakened versus the yen.

Japan’s Nikkei 225 fell 1.6 percent to 8,526.69 as the government said the economy grew slightly less in the third quarter. South Korea’s Kospi lost 1.9 percent to 1,875.81 and Hong Kong’s Hang Seng shed 2.6 percent to 18,605.92.

Benchmarks in Australia, Singapore, Taiwan and India also fell.

Mainland Chinese shares fell less than other Asian markets after inflation data for November fell to a lower than expected 4.2 percent, giving officials more wiggle room to ease credit to support growth in the economy. The benchmark Shanghai Composite Index dropped 0.6 percent to 2,315.24.

Germany and France, the two biggest economies in the eurozone, had hoped to persuade all 27 members of the European Union to back a change to the EU treaty that would impose tight fiscal rules on its members — a modification thought necessary to extricate the region from its debt crisis.

But after a late night of negotiations, Herman Van Rompuy, president of the European Council, announced Friday in Brussels a new treaty: one that will include the 17 eurozone states plus six other EU countries — not all 27 EU members.

The news follows disappointments from the day before, including comments by European Central Bank President Mario Draghi on Thursday that the bank had no immediate plans for a large-scale purchase of government bonds, which would have kept down the borrowing costs of weak countries like Italy and Spain.

Investors had been counting on such a move to help ease the region’s debt crisis.

“Without the ECB’s active participation in purchasing sovereign debt in Europe, there is no way you can solve the current crisis, and so the market was really disappointed,” said Francis Lun, managing director of Lyncean Holdings, a Hong Kong-based investment holding company. “American stock markets fell sharply and the contagion spread to Asia.”

European leaders will hunker down Friday for a second day of negotiations.

“Markets regard the summit as a final chance to save the euro,” strategists at Credit Agricole CIB said in a research note.

In New York on Thursday, the Dow Jones industrial average dropped 1.6 percent, to close at 11,997.70. The Standard & Poor’s 500 index ended 2.1 percent lower at 1,234.35. The Nasdaq lost 2 percent to close at 2,596.38.

Benchmark oil for January delivery fell 20 cents to $98.14 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $2.15 to end Thursday at $98.34.

In currencies, the euro weakened to $1.3333 from $1.3340 late Thursday in New York. The dollar weakened to 77.57 yen from 77.67 yen.

BANGKOK – Asian stocks fell Thursday as hopes faded that a bold solution might be found to a crippling debt crisis that is threatening to drag Europe into a deep recession.

Japan’s Nikkei 225 fell 1.1 percent to 8,629.15. South Korea’s Kospi lost 1 percent to 1,900.01 and Hong Kong’s Hang Seng tumbled 1.4 percent to 18,970.23. Australia’s S&P/ASX 200 dropped 0.4 percent to 4,276. Benchmarks in Singapore, Taiwan and mainland China also fell.

Just hours before a key summit of European leaders was to open in Brussels, doubts were surfacing that a lasting solution to the two-year-old crisis might be reached.

One point of friction has surfaced over a proposal by French President Nicolas Sarkozy and German chancellor Angela Merkel, leaders of the two economic powerhouses among the 17 nations that use the euro. They are demanding far-reaching changes to the treaty governing the European Union to enforce fiscal discipline among its members.

That proposal is being met with resistance by the European Council, an institution that defines the priorities of the entire 27-nation EU. Its president, Herman Van Rompuy, favors going a simpler route — amending existing rules that apply to the 17 euro countries to avoid the trickier step of requiring every country to approve the new treaty.

The disagreement has soured hopes for an immediate solution to the crisis.

“Normally this kind of talk would take place behind closed doors. The fact that it’s in the open suggests it already has and normal channels have, at least temporarily, broken down,” analysts at DBS Bank Ltd. said in a research note.

Additionally, certain provisions in the Franco-German proposal, such as setting automatic penalties for countries that overspend, are controversial and have the potential to delay an agreement.

Urgency was added to the situation Wednesday when ratings agency Standard & Poor’s threatened to downgrade the bonds of all EU countries because their economies were intricately linked with the 17 nations that use the euro.

On Wall Street, the Dow rose 0.4 percent to close at 12,196.37. The Standard & Poor’s 500 index rose 0.2 percent at 1,261.01. The Nasdaq composite index fell marginally to 2,649.21.

Benchmark oil for January delivery was down 13 cents to $100.36 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 79 cents to end at $100.49 per barrel on the Nymex on Wednesday.

In currencies, the euro rose to $1.3399 from $1.3394 late Wednesday in New York. The dollar was nearly unchanged at 77.65 yen from 77.66 yen.

BANGKOK – Asian stocks rose Wednesday amid growing optimism that European leaders will approve aggressive plans by the end of the week to rescue the region from a debt crisis that has roiled financial markets for months.

Benchmark oil rose above $101 per barrel, while the dollar fell against the euro but gained against the yen.

Japan’s Nikkei 225 rose 0.8 percent to 8,644.28 and South Korea’s Kospi added 0.7 percent to 1,916.15. Hong Kong’s Hang Seng gained 0.7 percent 19,081.36. Australia’s S&P/ASX 200 climbed 0.9 percent to 4,298.20. Benchmarks in Singapore, Taiwan and Indonesia also rose while mainland China and Malaysia fell.

On Wall Street, stocks mostly rose Tuesday on a report that European leaders might create a second bailout fund to supplement the one they have already agreed to. The second fund would nearly double the capacity of Europe’s financial rescue programs, the Financial Times reported.

The plan involves allowing the existing 440 billion euros bailout fund to continue running when a new 500 billion euros facility comes into force in mid-2012, almost doubling the rescue system’s firepower, Stan Shamu of IG Markets wrote in a report. “This latest move might just be the ‘bazooka’ Europe needs to appease markets.”

Shares of camera and medical equipment maker Olympus fell 6.9 percent, a day after an independent panel determined that the company had falsified accounting records to cover up huge investment losses from the 1990s. The company risks being delisted from the Tokyo Stock Exchange.

Japanese shipper Mitsui O.S.K. Lines rose 5.8 percent after an agreement with four other tanker owners to jointly operate very large crude carriers known as VLCCs starting early next year, Kyodo News Agency reported.

Asian stocks tumbled Tuesday, hours after Standard & Poor’s credit ratings agency warned that it might downgrade 15 of the 17 countries that use the euro — even Germany, which has a top AAA rating and Europe’s strongest economy.

On Tuesday, S&P said it might also cut the AAA rating of Europe’s bailout fund. The fund needs that top rating to cheaply raise money, and losing it would mean it would cost billions more to fund bailouts.

Hopes that Europe was finally serious about taming its debt crisis boosted U.S. stocks Tuesday. The Dow Jones industrial average closed up 0.4 percent at 12,150.13. The Standard & Poor’s 500 index closed up 0.1 percent to 1,258.47. The Nasdaq composite average closed down 0.2 percent at 2,649.56.

Benchmark crude for January delivery was up 22 cents to $101.50 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 29 cents to settle at $101.28 on Tuesday.

In currency trading, the euro rose to $1.3420 from $1.3414 late Tuesday in New York. The dollar rose to 77.74 yen from 77.70 yen.

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Follow Pamela Sampson on Twitter at http://twitter.com/pamelasampson

LONDON – Markets rose Monday on hopes that Europe’s leaders will agree on a plan to restore long-term confidence in the euro, saving it from collapse and averting global economic chaos.

A crucial week for the future of the euro kicks off later with a meeting of German Chancellor Angela Merkel and French President Nicolas Sarkozy in Paris. The two are expected to discuss how to achieve closer political and economic union of the 17 euro countries, including stricter budgetary oversight.

Merkel wants to change the basic EU treaty to reflect the tougher rules on euro countries and make them enforceable, while Sarkozy is resisting giving up more powers to Brussels, especially since he faces a tough re-election campaign in April. Sarkozy is thought to prefer an intergovernmental deal between the 17 euro countries.

The markets are hopeful that, given the gravity of the situation afflicting the eurozone, the two leaders will come up with a common proposal for tighter integration on budget matters. Analysts say that such a plan could lead to further emergency aid from the European Central Bank, possibly through the International Monetary Fund.

“Markets have gained ground ahead of a Franco-German summit which is supposed to resolve some long-standing issues between the two continental titans,” said Chris Beauchamp, market analyst at IG Index.

In Europe, the FTSE 100 index of leading British shares was up 0.5 percent at 5,582 while Germany’s DAX rose 0.9 percent to 6,133. The CAC-40 in France was 1.2 percent higher at 3,202.

The biggest gainer was Italy’s FTSE MIB, which was trading 2.2 percent higher, a day after the government led by Premier Mario Monti agreed big austerity and growth-boosting measures. They are to be presented to a skeptical Parliament later Monday.

Monti is to brief both Parliament chambers on the package, which includes euro30 billion ($27 billion) of spending cuts and tax hikes, euro10 billion of which will be reinvested to boost anemic growth.

His government agreed Sunday to slap taxes on property and luxury goods, increase the age at which retirees can draw pensions, trim the cost of Italy’s political class and give incentives to companies that hire women and young workers.

Significantly, the pressure on Italy eased in bond markets. The country’s ten-year bond yield was down 0.40 of a percentage point to 6.16 percent.

Italy is the eurozone’s third-largest economy and is considered too big to be bailed out. Its borrowing rates have in recent weeks hovered around the 7 percent mark, a level that eventually forced Greece, Ireland and Portugal to seek financial help. By comparison, bond yields in Germany, Europe’s largest and most stable economy, are roughly 2 percent.

Wall Street was poised for a stronger opening, too — Dow futures were up 1 percent at 12,120 while the broader Standard & Poor’s 500 futures rose 1.1 percent to 1,257.

The upbeat tone in markets helped the euro advance 0.3 percent to $1.3448 and the main New York oil contract rise 83 cents a barrel to $101.79.

Earlier in Asia, Japan’s benchmark Nikkei 225 index added 0.6 percent to close at 8,695.98 while Hong Kong’s Hang Seng rose 0.7 percent to 19,179.69. South Korea’s Kospi ended 0.4 percent higher at 1,922.90.

Mainland Chinese shares lost ground on worries over the economic outlook. The benchmark Shanghai Composite Index lost 1.2 percent to 2,333.23.

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Pamela Sampson in Bangkok contributed to this report.

BANGKOK – Asian stocks fell Wednesday after a meeting of Europe’s finance ministers failed to stem fears that the euro currency union is hurtling toward a breakup. Banking stocks slumped after some of the world’s top financial institutions were slapped with a credit rating downgrade.

Benchmark oil hovered below $99 per barrel and the dollar rose against the euro but fell against the yen.

Japan’s Nikkei 225 index dropped 1.2 percent to 8,376.45 and South Korea’s Kospi shed 0.7 percent to 1,841.79. Hong Kong’s Hang Seng lost 1.9 percent to 17,911.21. Australia’s S&P/ASX 200 fell marginally to 4,099.

Benchmarks in Singapore, Taiwan and mainland China were also lower. Indonesia, Malaysia and New Zealand rose.

Sentiment was dented after a meeting in Brussels of finance ministers from the 17 countries that use the euro ended without an announcement on plans to contain the debt crisis that is threatening to shatter the currency union.

The ministers sent debt-riddled Greece euro8 billion ($10.7 billion) to stem an immediate cash crisis, but they kicked more difficult issues — such as whether countries should cede some control over their finances to a central European authority — to the leaders of the European Union who meet next week.

In the latest sign of trouble, Italy was forced to pay a high interest rate on an auction of three-year debt Tuesday. The 7.89 percent rate was nearly three percentage points higher than last month, an enormous increase.

If Italy were to default on its debt of euro1.9 trillion ($2.5 trillion), the fallout could spell ruin for the euro common currency and send shock waves through the global economy. Such a prospect has left little appetite for risky assets.

Analysts at Credit Agricole CIB said in a report that “until concrete and detailed plans for a solution to the crisis are announced, the downward trend” in stocks will continue.

Ratings downgrades for many of the world’s largest banks also drove investors to the sidelines, analysts said. Standard & Poor’s on Tuesday lowered its credit ratings for 37 financial companies, including Bank of America Corp., Citigroup Inc. and HSBC Holdings PLC.

“The downgrade is affecting local stock market sentiment,” said Dickie Wong, executive director of research at Kingston Securities Ltd. in Hong Kong. “I believe it gives pressure on the international banking sector, and some local banks will probably be down quite a bit today.”

Hong Kong-listed Industrial & Commercial Bank of China, the world’s largest bank by market value, fell 2.3 percent. Japan’s Mizuho Financial Group lost 2 percent and Hong Kong shares of British bank HSBC Holdings fell 2.6 percent.

Insurance companies also fell. Hong Kong-listed China Life Insurance Co., the country’s biggest life insurer, lost 3.5 percent. Ping An Insurance fell 5 percent. Japan’s Tokio Marine Holdings shed 2.2 percent.

On Wall Street on Tuesday, a jump in U.S. consumer confidence sent stocks modestly higher. The Dow Jones industrial average rose 0.3 percent to close at 11,555.63. The Standard & Poor’s 500 index rose 0.2 percent to 1,195.19. The Nasdaq composite, which consists mostly of technology stocks, fell 0.5 percent to 2,515.51.

The Conference Board, a private research firm, said its Consumer Confidence Index climbed 15 points in November to 56.0 — an improvement, but still well below the level of 90 that indicates an economy on solid footing.

Benchmark crude for January delivery was down 63 cents to $99.16 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.58 to settle at $99.79 on Tuesday.

In currency trading, the euro slipped to $1.3328 from $1.3331 late Tuesday in New York. The dollar slipped to 77.88 yen from 77.93 yen.

NEW YORK (Reuters) – Stock index futures rose on Tuesday after Italian bond yields fell from session highs amid hopes a meeting of European finance ministers will be a step forward in resolving the region's debt crisis.

Italian government bond yields fell from session highs on Tuesday after a sale of 7.5 billion euros in bonds, but were mostly still up on the day.

German Bunds reversed early gains on relief the sale drew enough demand and on hopes policymakers would make progress in tackling the debt crisis at meetings this week.

S&P 500 futures rose 2 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 26 points, and Nasdaq 100 futures were flat.

Euro zone finance minister are set to agree on details for bolstering a bailout fund, according to documents obtained by Reuters.

"European finance ministers will hopefully agree and provide details today on the (fund) with 20-30 percent insurance coverage on new bond issuance, with a leveraging of three to four times," said Peter Boockvar, equity strategist at Miller Tabak & Co in New York.

"Imperative to this new entity actually functioning as hoped will be France hanging on to its AAA credit rating, which of course is very tenuous."

According to a French newspaper report, Standard & Poor's could change the outlook for France's triple-A rating to "negative" within the next 10 days.

Also, Moody's said it could downgrade the subordinated debt of 87 banks across 15 European Union nations on concerns that governments would be too cash-strapped to bail them out.

Late Monday, Fitch revised its outlook on the U.S. credit rating to negative, citing the failure of a special congressional committee to reach an deficit-reduction agreement. Fitch gave the United States until 2013 to come up with a "credible plan" to tackle its ballooning budget deficit or risk a downgrade of the country's coveted AAA rating.

In company news, AMR Corp (AMR.N), the parent of American Airlines, filed for voluntary Chapter 11 bankruptcy protection. AMR also named a new chairman and chief executive.

On the macro front, investors awaited the Standard & Poor's/Case-Shiller home price index for September, due for release at 9 a.m. EST. index 20-city index is expected to show no changes in September.

Also the Conference Board's November consumer confidence is due at 10 a.m. EST. The report is forecast to show a reading of 44.0, up from 39.8.

U.S. stocks rebounded from seven days of losses on Monday as investors used the latest effort by European leaders to resolve the region's debt crisis as an opportunity to cover short positions.

(Reporting by Angela Moon; editing by Jeffrey Benkoe)