MILAN – After an optimistic start to the trading week, stocks around the world lost their steam Tuesday after subdued German growth figures reinforced fears over the global economy.

Germany reported that growth almost ground to a halt in the second quarter, in another downbeat note for the global economy following similarly disappointing readings from France and the United States. Quarterly growth was only 0.1 percent on lagging consumer spending and construction investment — putting a damper on recovery driven by booming exports that power Europe’s biggest economy.

The fall in German growth was the root cause behind the fall in the eurozone’s expansion to 0.2 percent during the quarter from 0.8 percent in the previous three-month period.

“It is the really disappointing German GDP reading that is weighing on European markets today,” said Giles Watts, head of equities at City Index.

In Europe, Germany’s DAX was 0.45 percent lower at 5,994 while the CAC-40 in France fell 0.25 percent to 3,230. Britain’s FTSE 100 of leading British shares was up slightly at 0.13 percent at 5,357.

Milan markets, in the first test of euro45.5 billion ($64.8 billion) in emergency austerity measures announced last week, closed down 0.87 percent at 15,750.

U.S. data did little to improve sentiment at the Wall Street open, with soft housing figures largely offset by better than expected industrial production data and the news that Fitch Ratings was keeping its triple A rating on U.S. debt. Ten or so days ago, Standard & Poor’s downgraded its rating on the U.S., helping to trigger the turmoil in financial markets.

Wall Street opened lower after posting impressive gains Monday on a round of corporate deals. The Dow Jones industrial average was down 0.6 percent to 11.415. The S&P 500 index was down 0.8 percent to 1,195.

The euro also was weighed down by the growth data, trading 0.3 percent lower on the day at $1.439.

Jane Foley, senior currency strategist at Rabobank International, said the German figures had “taken the wind out of the euro’s sails.”

Europe’s single currency has prospered in recent sessions as stocks recovered their poise following dramatic losses. When investors have a higher appetite for risk, assets like shares and the euro garner support.

Also weighing on the single currency Tuesday is unease over a highly anticipated summit between French leader Nicolas Sarkozy and German Chancellor Angela Merkel.

There had been hopes over the weekend that the two would discuss issuing jointly guaranteed European government bonds as a means to end the eurozone’s crippling debt crisis.

However, the prospect of so-called eurobonds featuring at the summit appear to have been dashed after two leading German ministers reiterated opposition to them.

Eurobonds would be a major step toward the bloc’s economic integration, and are billed by supporters as an overnight solution to the crisis. Italy, Greece, Belgium and Luxembourg are among the nations calling for eurobonds.

“Considering the way Europe has gone about dealing with the sovereign crisis, Germany and the rest of the reluctant euro area countries, like Finland, will likely need a crisis, perhaps threatening the euro itself before bold measures such as a eurobond are considered,” said Benjamin Reitzes, an analyst at BMO Capital Markets.

Earlier Tuesday, Asian shares traded higher in the wake of the previous day’s advance in Europe and the U.S.

Japan’s Nikkei 225 index rose 0.2 percent to close at 9,107.43, while South Korea’s Kospi jumped 4.8 percent to 1,879.87 following a public holiday.

However, Hong Kong’s Hang Seng fell 0.2 percent to 20,212.08 and mainland Chinese shares snapped a five-session winning streak as investors cashed in on recent gains. The Shanghai Composite Index lost 0.7 percent to 2,608.17, and the Shenzhen Composite Index lost 0.7 percent to 1,166.84.

In the oil markets, prices fell alongside equities. Benchmark oil for September delivery was down $1.84 to $86.04 a barrel in electronic trading on the New York Mercantile Exchange.

___

Pamela Sampson contributed from Bangkok.

NEW YORK (AFP) – High-flying shares in Chinese companies have come crashing to the ground recently, amid a flurry of accounting scandals and a crackdown by US regulators.

Less than two months ago, US investors were eagerly buying shares in Renren, a social-networking company dubbed the “Facebook of China,” and other firms that seemed poised to benefit from China’s rapid economic growth.

Renren’s shares jumped 29 percent on the day of its initial public offering (IPO) on the New York Stock Exchange in May. Then they sank, closing at just $7.03 on Friday, down to about half of their IPO price of $14.

Of the 12 Chinese companies that have debuted on US exchanges this year, only two are trading above their IPO prices, according to data from Morningstar, an investment research company.

“The drumbeat out of China right now is that certainly there’s an air of fraud and of different sets of numbers for Chinese reporting versus US reporting,” said Bill Buhr, an analyst with Morningstar.

“It basically is spooking investors. I think they assume that where there’s smoke, there’s fire,” he added.

The fallout threatens even firms which have not been tainted by accusations of wrongdoing, such as search engine Baidu, which closed at $117.68 on Friday, a drop of nearly 25 percent from its intraday high of $156 in April.

“Is This the China Bubble Bursting?” asked a recent headline in The Wall Street Journal.

The most recent Chinese company to fall under a cloud is Harbin Electric, whose stock has plunged more than 40 percent since Thursday, when a research firm accused it of falsifying documents.

Harbin Electric, a machinery maker listed on the NASDAQ, has denied the accusations.

The Securities and Exchange Commission has halted trading of several Chinese firms this year, accusing them of violations like keeping two sets of books or failing to disclose that their auditors had quit.

Last week, the SEC said it was probing two more firms — China Intelligent Lighting and Electronics and China Century Dragon Media — for submitting “materially misleading and deficient offering documents.”

“It will be difficult for Chinese IPOs to go forward in the US until the managements of companies decide to improve their operational and financial disclosure,” said Linda Killian, a principal at Renaissance Capital, which researches the IPO market.

Many of the Chinese companies being probed by the SEC listed on US exchanges through “reverse mergers,” a controversial technique in which a firm seeking to go public acquires a publicly traded shell company.

Financial reporting requirements are not as stringent for reverse mergers as they are for traditional IPOs, and the SEC issued a warning about the practice earlier this month, which singled out several Chinese firms.

“Given the potential risks, investors should be especially careful when considering investing in the stock of reverse merger companies,” Lori Schock, an SEC official, said in a statement.

Other factors have also harmed Chinese IPOs, such as rising inflation in China, tighter capital requirements for Chinese banks and civil unrest in smaller Chinese cities, said Killian of Renaissance Capital.

As the craze for Chinese IPOs has waned, commentators such as stock-market guru Jim Cramer have turned their attention away from China’s strong growth prospects and towards its weak record on corporate governance.

“There’s very little corporate governance, informal auditing, and of course, the prospect of government intervention since, remember, it’s still officially a communist country,” Cramer said on CNBC television.