NEW YORK (Reuters) – Stock index futures rose in choppy trade on Thursday on talk the Greek government might collapse, thus avoiding a referendum on its euro zone membership and easing concerns about an imminent default.

European shares recovered from early losses and rose 1 percent, with the bank sector, a key focus because of its sovereign debt exposure, up 1.4 percent, and a Greek bank index up 8.4 percent.

"The prevailing sentiment is (Greek Prime Minister George) Papandreou is on the brink of being ousted, and if that's the case there's no referendum and we're back to where we were a week ago," said Art Hogan, managing director of Lazard Capital Markets in New York.

S&P 500 futures rose 5.5 points and were slightly above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures gained 67 points, and Nasdaq 100 futures rose 4.25 points.

European leaders agreed last week on a plan to reduce Greece's debt and strengthen the region's bailout fund in a move that helped spark a month-end rally. October was the best month for U.S. stocks in 20 years.

Papandreou has not resigned and does not intend to do so, his chief of staff told a Greek newspaper.

France and Germany earlier told Athens it would not receive its next aid tranche until a national referendum had passed, sparking fears Greece could default and the crisis could spread to larger economies.

In the United States, the Labor Department is due to release weekly unemployment insurance applications data at 8:30 a.m. EDT (1230 GMT). First-time claims are forecast at 400,000, according to a Reuters poll versus 402,000 in the previous week.

The Labor Department also releases preliminary third-quarter productivity and labor costs.

U.S. companies announcing quarterly results later Thursday include Starbucks Corp, American International Group Inc and First Solar Inc.

The Institute for Supply Management releases its October non-manufacturing index at 10 a.m. EDT (1400 GMT). Economists forecast a reading of 53.5 versus 53.0 in September.

The Commerce Department releases September factory orders at 10 a.m. (1400 GMT). Economists in a Reuters survey expect a 0.1 percent fall, compared with a 0.2 percent drop in August.

(Reporting by Rodrigo Campos; editing by Jeffrey Benkoe)

BANGKOK – Asian stock markets fell Thursday for the fourth straight day as a European deal to bail Greece out of its financial mess appeared to be on the verge of unraveling.

Hong Kong’s Hang Seng fell 1.2 percent to 19,495.01. South Korea’s Kospi lost 0.7 percent to 1,885.58 and Australia’s S&P/ASX 200 shed 0.1 percent to 4,220.65. Benchmarks in Singapore, Taiwan, Malaysia and Indonesia were also lower.

Japanese markets were closed for a national holiday. Mainland Chinese shares rose.

Greece’s prime minister unexpectedly announced Monday that he would call a national vote on the European bailout plan that entails painful tax increases and drastic welfare cuts in exchange for massive aid to keep his debt-ridden nation solvent.

European leaders then drew a line in the sand for Greece, saying its referendum on the hard-won bailout deal will decide whether it stays in the 17-nation grouping that uses the euro common currency — and vowing Athens will not get new aid until the result is in.

The acknowledgment that the vote could see Greece leaving the currency union is the first official admission that such an exit is possible and follows almost two years of pledges to the contrary. The referendum will likely take place on Dec. 4 unless the government of Prime Minister George Papandreou falls beforehand.

“Ahead of the vote markets will remain highly nervous and risk aversion will remain elevated. Consequently risk assets are set to face further pressure,” Credit Agricole CIB said in a research note.

Should Greek voters reject the austerity plan, it could also lead to a messy default on the country’s debt that would likely cause massive losses for banks that hold Greek bonds — and possibly spark a wider financial crisis that could send Europe into recession.

Papandreou is scheduled to explain his stance when he meets with leaders of the Group of 20 nations at a summit in France on Thursday and Friday.

The uncertainty about what lies ahead for the European Union — the world’s largest economic grouping — as well as the subset of nations that use the euro common currency, hit energy stocks hard.

Hong Kong-listed PetroChina Co., the country’s biggest oil and gas company, fell 3.5 percent. State-owned coal miner China Shenhua Energy lost 2.8 percent. Energy Resources of Australia was down 2.8 percent.

South Korea’s LG Electronics plummeted 8.5 percent following news reports that the world’s No. 3 mobile phone maker was seeking to issue new shares, Yonhap News Agency said.

Hong Kong-listed shares of Lenovo Group, a world leader in personal computer manufacturers, rose 4.8 percent a day after reporting that its profit in the first half of the year nearly doubled on strong emerging market sales.

In the U.S., Wall Street ended higher after an increase in hiring by private companies helped lift stock prices.

Automatic Data Processing said company payrolls rose by 110,000 in October, more than economists had expected. ADP also revised its survey results for September higher. Investors see ADP’s report as a precursor to the government’s broader employment report, which is due out Friday.

The Federal Reserve said Wednesday the economy was likely to expand modestly over the next two years. But Fed Chairman Ben Bernanke cautioned that the pace of economic growth will likely be “frustratingly slow.” The Fed said it would not take any more steps to help the economy for now, but it left open the possibility of more steps later.

The Dow Jones industrial average gained 1.5 percent to close at 11,836.04. The Standard and Poor’s 500 rose 1.6 percent to 1,237.90. The Nasdaq composite gained 1.3 percent to 2,639.98.

Benchmark crude for December delivery was down 98 cents at $91.53 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 32 cents to settle at $92.51 in New York on Wednesday.

In currencies, the euro fell to $1.3690 from $1.3765 late Wednesday in New York. The dollar slipped slightly to 78.04 yen from 78.06 yen.

TORONTO (Reuters) – Toronto's main stock index dipped lower on Wednesday morning, pressured by falling commodity prices, as uncertainty over Europe's debt crisis again dogged the market.

The TSX had rallied more than 3 percent in the previous two sessions on hopes that euro zone leaders were readying decisive action to tackle the regions debt woes.

But investors pulled back on Wednesday, as markets focused on international auditors heading for Athens to inspect the Greek government's austerity plan, while a German suggestion that a new bailout may be renegotiated caused consternation.

"We've had quite a roller-coaster week," said Francis Campeau, a broker at MF Global Canada in Montreal. "The street is waiting on the side to see if all the speculation about the plan to save Europe will pan out."

At 10:44 a.m. EDT, the Toronto Stock Exchange's S&P/TSX composite index was down 32.63 points, or 0.28 percent, at 11,788.46, after opening higher. Seven of the 10 main index groups were lower.

Resource issues weighed as economic uncertainty and a strong U.S. dollar pressured commodity prices. The materials sector fell 0.5 percent, while energy issues slid 0.6 percent.

Potash Corp was the heaviest decliner, down 2.7 percent at C$48.66, while Teck Resources fell 2.7 percent to C$31.20 and Suncor Energy lost 0.5 percent to C$28.24.

"Any growth stories are under pressure today," added Campeau. "Copper is down 4 percent, and copper is often the proxy of risk appetite and global world demand."

Financials were flat. Toronto-Dominion Bank was the heaviest gainer on the index, up 0.5 percent at C$74.15, while Manulife Financial tumbled 1.7 percent to C$12.04 and Bank of Nova Scotia slid 0.4 percent to C$52.78.

Shares of Yellow Media Inc plunged 46.5 percent to C$0.30 after the debt-laden telephone directory publisher said it would take a C$2.9 billion charge in the third quarter.

In the latest economic data, new orders for long-lasting U.S. manufactured goods slipped in August on weak demand for motor vehicles, but a rebound in a gauge of business spending suggested the U.S. economy would avoid another recession.

(Reporting by Trish Nixon; editing by Rob Wilson)

LONDON (Reuters) – Investor hopes for a bigger bailout fund for euro zone debtors gave way to worries about the details on Wednesday, putting the brakes on a three-session stock rally and sending European shares lower.

The dollar rose and core euro zone government bond yields were flat.

Equity markets have rallied over the past few sessions on expectations that European officials will aggressively tackle the debt crisis in its peripheral economies, notably Greece, by boosting the euro zone's 440 billion euro rescue fund.

But the plans face opposition in Germany and there are signs of a split within the currency bloc over the terms of Greece's next bailout.

European Commission President Jose Manuel Barroso, however, indicated Greek banks could receive more help [ID:nL5E7KS0LH].

The uncertainty was enough to take the air out of the tentative global stock rally.

World stocks as measured by MSCI were down 0.1 percent with the FTSEurofirst 300 opening sharply lower before stabilizing around a half a percent down.

The European index has lost close to 17 percent this year.

Japan's Nikkei earlier closed flat.

"The market has obviously got enthusiastic about discussions about the European Financial Stability Fund," said Andrea Williams, fund manager at Royal London Asset Management.

"But we are a long way from it being concluded."

International auditors were heading for Athens to continue discussions on the next tranche of agreed aid, while Germany suggested a new bailout may be renegotiated.

EURO LEVELS

The euro rose 0.1 percent to $1.3607, paring some of the previous day's gains when it rose to a high of $1.3668.

It has lost 5.6 percent so far this month but is off an eight-month low of $1.3361 hit on Monday.

"We saw a late reversal of some of last night's big risk on moves on reports that European leaders were not completely united on the planned policy response," ANZ said in a note.

The dollar was slightly higher against a basket of major currencies.

German Bunds reversed early losses and briefly turned negative on the day after Barroso spoke.

"There were comments from Barroso on considering a wider lending mechanism to help the Greek banking system and that's knocked Bunds a bit and also we have the five-year (German) supply coming up," a trader said.

Germany will sell 6 billion euros of new 5-year bonds later in the day.

(Reporting by Jeremy Gaunt; editing by Anna Willard)

NEW YORK (Reuters) – Stocks fell on Monday but staged a late comeback after fears of a looming Greek debt default diminished on news of a possible deal to advance new bailout funds to Greece.

Stocks spent most the session sharply lower after European leaders disappointed investors by failing to come up with any new solutions to the euro zone's sovereign debt crisis over the weekend.

However, a Greek finance ministry official said after talks on Monday with the European Union and International Monetary Fund that the country was near an agreement with international lenders to continue receiving money.

"For the time being it looks as though there is hope the conversation is going to take on a more positive and constructive tone," said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.

"A little reason for a little buoyancy in the market, but we've seen this before."

Energy and financial stocks were among the worst performers of the session. The PHLX oil service sector index (.OSX) dropped 1.7 percent as oil prices settled down 2.6 percent to $85.70 on demand worries.

The KBW bank index (.BKX) fell 2.8 percent following a steep decline in European banks on worries euro zone leaders won't be able to prevent debt-stricken Greece from sliding into default. Citigroup Inc (C.N) slipped 4.4 percent to $27.71.

International lenders told Greece on Monday it must shrink its public sector and improve tax collection to avoid default within weeks as investors, unnerved by political setbacks in Europe dumped risky euro zone assets.

The Federal Reserve will begin a two-day meeting on Tuesday and is poised to increase downward pressure on longer-term interest rates this week in a bid to accelerate a sputtering U.S. recovery.

"It's the Greece thing and the Fed meeting this week. We've seen a lot of write-up on this Operation Twist, a lot of it may be baked in," said Terry Morris, senior equity manager for National Penn Investors Trust Company in Reading, Pennsylvania.

The Dow Jones industrial average (.DJI) dropped 108.08 points, or 0.94 percent, to 11,401.01. The Standard & Poor's 500 Index (.SPX) lost 11.92 points, or 0.98 percent, to 1,204.09. The Nasdaq Composite Index (.IXIC) edged down 9.48 points, or 0.36 percent, to 2,612.83.

In the "twist" operation, traders expect the Fed to try to stimulate growth by pushing down longer-term debt yields by buying bonds and selling short-term debt. A Fed statement is expected on Wednesday at the end of the meetings.

Doubts about U.S. fiscal policy were also spoiling the appetite for stocks. President Barack Obama laid out a $3 trillion plan to cut U.S. deficits by raising taxes on the rich, but Republicans mocked it as a political stunt, signaling the proposal has little chance of becoming law.

Apple Inc (AAPL.O) helped curb declines on the Nasdaq as shares hit an all-time high of $413.23 earlier before closing up 2.8 percent to $411.63. An analyst said the stock had broken through technical levels, and Morgan Stanley included the iPad maker in a list of companies capable of increasing or initiating dividends.

Caterpillar Inc (CAT.N) was one of the worst performers on the Dow, off 1.5 to $84.60 after Raymond James cut its rating on the world's largest construction equipment maker, citing slowing global economic growth.

Volume was light, with about 7.11 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, slightly below the daily average of 7.9 billion.

Declining stocks outnumbered advancing ones on the NYSE by 2,310 to 667, while on the Nasdaq, decliners beat advancers 2,030 to 552.

(Reporting by Chuck Mikolajczak; Editing by Kenneth Barry)

NEW YORK (Reuters) – The Dow and the S&P 500 rose modestly in volatile trading on Wednesday, as equities bounced around on heightened uncertainty surrounding Federal Reserve Chairman Ben Bernanke’s speech to central bankers on Friday.

The market’s swings came a day after the three major U.S. stock indexes rallied 3 percent to 4 percent on hopes that Bernanke would hint at possible stimulus measures to aid the struggling economy.

Sectors that led Tuesday’s rally, such as energy and technology, shed gains. Growth stocks such as Nvidia and Netflix slid.

Retailers and banks, however, gained ground. Dow component Home Depot shot up 3.5 percent to $34.28, while the KBW Bank Index climbed 1.8 percent.

“I think after a run-up like yesterday, a little bit of choppy action is not surprising,” said Frank Gretz, market analyst and technician at Shields & Co., a brokerage in New York. “People are buying value stocks, so the uptrend is still intact.

“This kind of choppy action is what you’re going to have to live with for a while,” he said. “When the selling is out of the way, there’s no more sellers left, so they (stocks) go back up.”

The S&P financials index advanced 1.4 percent, with JPMorgan Chase & Co shares up 1.8 percent at $35.40.

Bank of America Corp rose 9.8 percent to $6.92, reversing losses on Tuesday, when the Dow component hit a 2-1/2-year low on fears it may have to raise large amounts of capital. BofA shares remain down more than 30 percent so far this month.

Equity indexes rose as much as 1 percent earlier after a stronger-than-expected increase in July durable goods orders, but then gave up those gains by late morning. Traders remained on tenterhooks over whether Bernanke would announce concrete Fed action or simply outline gradualist measures.

The Dow Jones industrial average advanced 20.78 points, or 0.19 percent, to 11,197.54. The Standard & Poor’s 500 Index rose 3.10 points, or 0.27 percent, to 1,165.45. The Nasdaq Composite Index fell 5.93 points, or 0.24 percent, to 2,440.13.

Exchange-traded funds tracking gold stocks and gold-mining stocks fell after bullion futures dropped more than 4 percent. The SPDR Gold Trust Index declined 3.7 percent, while the Market Vectors Gold Miners Index fell 4 percent.

Among individual decliners, Barrick Gold shares dropped 4.3 percent to $48.49, Goldcorp Inc shares fell 5.3 percent to $48.58 and Kinross Gold shares lost 3.4 percent to $16.48.

The government reported that new orders for long-lasting U.S. manufactured goods surged in July, rising double the amount economists had forecast.

(Reporting by Ashley Lau; Editing by Jan Paschal)

NEW YORK (Reuters) – The historic swings in the U.S. stock market over the past two weeks have investors struggling to figure out where equities may be headed next. Only one thing seems clear: The volatility is far from over.

A lack of progress on some of the economy’s biggest issues — from Europe’s sovereign debt to increasing signs the U.S. economy is in danger of slipping back into recession — will drive more uncertainty and moves from one extreme to another.

However, with the S&P 500 down 17.6 percent from its 2011 high, many investors say a bottom could be near, and bargain hunters could trigger at least a momentary bout of buying.

“We’re not even close to the end of volatility, but given a decline of almost 17 percent in 13 days, we could see a rise from these levels,” said Mike Gibbs, chief market strategist at Morgan Keegan in Memphis, Tennessee.

“If there’s something major with the European situation, that could be a catalyst for value investors to come back in.”

The situation in Europe has been dictating much of the market’s recent movement. Last week, shares fell on Tuesday after a meeting between the heads of France and Germany failed to squelch fears about euro-zone leaders’ ability to contain the region’s debt issues, which could impact global growth and the profit outlooks of U.S. banks.

Market participants will also look ahead to comments from Federal Reserve Chairman Ben Bernanke at the central bank’s annual meeting in Jackson Hole, Wyoming, on Friday.

The Fed pledged this month to keep interest rates “exceptionally low … at least through mid-2013,” news that sparked a short-lived rally, suggesting that there may be little new information coming out of the Jackson Hole meeting that could move markets.

“There’s nothing Bernanke can do that’s likely that will help stocks,” said Matt McCormick, a money manager at Cincinnati-based Bahl & Gaynor Inc, which has $3.2 billion in assets under management.

“If you see potential bank problems out of Europe before then, he might have some ammo for another round of quantitative easing, but absent that, investors hoping for an August surprise will likely be disappointed.”

AN ATTRACTIVE YIELD

The S&P 500 fell 4.7 percent last week, extending losses of 12.4 percent over the previous three weeks, its worst streak of that length in 2-1/2 years.

The CBOE Volatility Index (.VIX), also known as the VIX, rose about 20 percent last week.

In a note, Birinyi Associates wrote that while the market remained difficult in the short term, there were indications that stocks were attractively valued.

Noting that the S&P 500 was 10 percent below its 50-day moving average, Birinyi said, “This is the most oversold the market has been” since March 2009.

Birinyi pointed out that the 2.25 percent dividend yield on the S&P 500 was higher than the 10-year U.S. Treasury note’s yield, making this “only the second period since the 1950s where stocks have yielded more than bonds.”

Last week, the 10-year note’s yield fell below 2 percent during Thursday’s buying frenzy; the yield fell as low as 1.978 percent — the lowest since at least 1950. At Friday’s close in New York, the 10-year Treasury note’s yield stood at 2.07 percent.

DOING THE EUROPEAN “LOCK-STEP”

Issues in Europe may take on out-sized influence this week as the U.S. earnings season draws to a close, with Tiffany & Co (TIF.N) and Applied Materials (AMAT.O) among the few S&P 500 companies on tap to report.

Earnings, while often overshadowed by macroeconomic themes, have largely come in stronger than expected, giving investors at least one reason for optimism.

This week, investors will have plenty of U.S. economic indicators to watch, including the release of data on new home sales data, durable goods orders, consumer sentiment and gross domestic product. Should the data follow the recent trend of weak reports, which have contributed to the growing sense that growth will be muted, it could cause further selling.

“There’s still something of a sense that this is just a weak patch in the economy, but prolonged weak data would point more definitely to a double dip,” said Marc Scudillo, managing officer at EisnerAmper in New York. “There’s a good floor to the S&P 500 at 1,100 right now. If we go under that, there’s room to move even further to the downside.”

While U.S. growth concerns remain a primary focus for investors, the issues in Europe are seen as the primary driver of the U.S. stock market in the near-term.

Last week, stocks fell on Tuesday as the leaders of France and Germany failed to discuss boosting the size of the euro zone’s rescue fund or the sale of euro bonds, though they detailed closer euro-zone integration. Many investors believe more aggressive policies are needed to restore stability to the area.

“What I’m seeing right now is basically a crisis of confidence, more so than an economic crisis or financial crisis necessarily at this stage,” said Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland.

Trunow, who helps oversee about $14.8 billion in assets, cited “the inability by policy-makers to come to a good path” as the reason for the uncertainty.

Morgan Keegan’s Gibbs said that the endgame in Europe was that “if confidence doesn’t return, we’ll continue to see the S&P essentially moving in lock-step with European markets.”

(Reporting by Ryan Vlastelica; Editing by Jan Paschal)

NEW YORK (Reuters) – The historic swings in the U.S. stock market over the past two weeks have investors struggling to figure out where equities may be headed next. Only one thing seems clear: The volatility is far from over.

A lack of progress on some of the economy’s biggest issues — from sovereign debt in Europe to growing signs the U.S. economy is in danger of slipping back into recession — will drive more uncertainty and moves from one extreme to another.

However, with the S&P 500 down 17.6 percent from its 2011 high, many investors say a bottom could be near and bargain hunters could trigger at least a momentary bout of buying.

“We’re not even close to the end of volatility, but given a decline of almost 17 percent in 13 days, we could see a rise from these levels,” said Mike Gibbs, chief market strategist at Morgan Keegan in Memphis, Tennessee.

“If there’s something major with the European situation, that could be a catalyst for value investors to come back in.”

The situation in Europe has been dictating much of the market’s recent movement. On Tuesday, shares fell after a meeting between the heads of France and Germany failed to squelch fears about euro-zone leaders’ ability to contain the region’s debt issues, which could impact global growth and the profit outlooks of U.S. banks.

Market participants will also be looking ahead to comments from Federal Reserve Chairman Ben Bernanke at the central bank’s annual meeting in Jackson Hole, Wyoming, on Friday.

The Fed recently pledged to keep interest rates “exceptionally low … at least through mid-2013,” news that sparked a short-lived rally, suggesting that there may be little new information coming out of the Jackson Hole meeting that could move markets.

“There’s nothing Bernanke can do that’s likely that will help stocks,” said Matt McCormick, a money manager at Cincinnati-based Bahl & Gaynor Inc, which has $3.2 billion in assets under management.

“If you see potential bank problems out of Europe before then, he might have some ammo for another round of quantitative easing, but absent that, investors hoping for an August surprise will likely be disappointed.”

AN ATTRACTIVE YIELD

The S&P 500 fell 4.7 percent this week, extending losses of 12.4 percent over the previous three weeks, its worst streak of that length in 2-1/2 years.

The CBOE Volatility Index (.VIX), also known as the VIX, is up 20 percent this week.

In a note, Birinyi Associates wrote that while the market remained difficult in the short term, there were indications that stocks were attractively valued.

Noting that the S&P 500 was 10 percent below its 50-day moving average, Birinyi said, “This is the most oversold the market has been” since March 2009.

Birinyi pointed out that the 2.25 percent dividend yield on the S&P 500 was higher than the 10-year U.S. Treasury note’s yield, making this “only the second period since the 1950s where stocks have yielded more than bonds.”

DOING THE EUROPEAN “LOCK-STEP”

Issues in Europe may take on outsized influence next week as the U.S. earnings season draws to a close, with Tiffany & Co (TIF.N) and Applied Materials (AMAT.O) among the few S&P 500 companies on tap to report.

Earnings, while often overshadowed by macroeconomic themes, have largely come in stronger than expected, giving investors at least one reason for optimism.

Next week, investors will have plenty of U.S. economic indicators to watch, including the release of data on new home sales data, durable goods orders, consumer sentiment and gross domestic product. Should the data follow the recent trend of weak reports, which have contributed to the growing sense that growth will be muted, it could cause further selling.

“There’s still something of a sense that this is just a weak patch in the economy, but prolonged weak data would point more definitely to a double dip,” said Marc Scudillo, managing officer at EisnerAmper in New York. “There’s a good floor to the S&P 500 at 1,100 right now. If we go under that, there’s room to move even further to the downside.”

While U.S. growth concerns remain a primary focus for investors, the issues in Europe are seen as the primary driver of the U.S. stock market in the near-term.

On Tuesday, markets fell as the leaders of France and Germany failed to discuss boosting the size of the euro zone’s rescue fund or the sale of euro bonds, though they detailed closer euro-zone integration. Many investors believe more aggressive policies are needed to restore stability to the area.

“What I’m seeing right now is a basically a crisis of confidence, more so than an economic crisis or financial crisis necessarily at this stage,” said Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland.

Trunow, who helps oversee about $14.8 billion in assets, cited “the inability by policy-makers to come to a good path” as the reason for the uncertainty.

Morgan Keegan’s Gibbs said that the endgame in Europe was that “if confidence doesn’t return, we’ll continue to see the S&P essentially moving in lock-step with European markets.”

(Reporting by Ryan Vlastelica; Editing by Jan Paschal)

BANGKOK – Asian stocks were mixed Wednesday following a retreat on Wall Street as the staggering toll exacted by Japan’s worst-ever earthquake came into sharper focus and uncertainties grew about the outcome of Western military action against Libya.

Japan’s Nikkei 225 was down 0.8 percent to 9,531.01 after a newspaper reported that government estimates of damages from the catastrophic March 11 earthquake and tsunami that devastated Japan’s industrial northeast could exceed $300 billion.

The disaster also triggered a crisis at a nuclear power plant that led to the evacuation of tens of thousands of people and forced power cuts due to the shutdown of 11 of Japan’s 54 nuclear power plants.

Two of the country’s flagship brands — Toyota Motor Corp. and Honda Motor Co. — put off a return to normal production due to shortages of parts and raw materials because of earthquake damage to factories in affected areas. Toyota, the world’s No. 1 automaker, said it will suspend output until Sunday — a production loss of 140,000 cars.

Unsurprisingly, the slowdowns hit their stock prices: Toyota drooped 1.5 percent and Honda was down 1.6 percent. Other Japanese vehicle makers were pummeled, including Mazda Motor Corp., down 2.6 percent, and Nissan Motor Corp., down 2.5 percent.

Elsewhere, South Korea’s Kospi was up 0.2 percent to 2,016.35. Among big gainers was SsangYong Cement Industrial Co. Ltd., jumping 9 percent amid expectations that its exports would rise as Japan undertakes its mammoth task of rebuilding.

Benchmarks in Taiwan, Singapore and Thailand also rose, while Hong Kong’s Hang Seng index dropped 0.3 percent to 22,798.01.

Investors, meanwhile, had a separate worry: a crisis in Libya and the real possibility that Moammar Gadhafi could keep his grip on power despite military action by Western powers intended to keep Gadhafi from overwhelming rebel forces trying to end his four-decade rule.

Oil prices hovered near $105 a barrel as violent uprisings in Libya and elsewhere in the Middle East kept traders nervous about possible crude supply disruptions. OPEC-member Libya, which produces enough oil to meet nearly 2 percent of world demand, has almost totally stopped shipping it.

The Yonghap news agency quoted South Korea’s top central banker, Bank of Korea Gov. Kim Choong-soo, as saying Wednesday that oil prices are not likely to jump to the level seen in 2008, when oil prices peaked at $147 per barrel.

That added to the feeling among many that the crises in Japan and the Middle East won’t derail the global economy.

“Despite these worries, many countries are still cautiously optimistic about the resilience of the global economy, and have not lowered their vigilance against rising inflation,” DBS Bank Ltd. in Singapore said in a report, noting that Thailand and Korea have recently hiked interest rates.

“There is also more talk in China about allowing more yuan appreciation to address inflation,” DBS said.

On Wall Street, stocks edged lower Tuesday, ending a three-day rally that had lifted the Dow Jones industrial average above 12,000 for the first time since an earthquake hit Japan more than a week ago.

The Dow Jones industrial average fell 17.90 points to close at 12,018.63. The Standard & Poor’s 500 index fell 4.61, or 0.4 percent, to 1,293.77. The Nasdaq composite index fell 8.22, or 0.3 percent, to 2,683.87

Benchmark crude for May delivery was down 27 cents to $104.70 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.88 to settle at $104.97 on Tuesday.

In currencies, the euro dropped to $1.4179 from $1.4207 late Tuesday in New York. The dollar was little changed at 80.89 yen.

LONDON – The relief generated by the resignation of Egypt’s president Hosni Mubarak last week has proved short-lived, with stock markets in Europe failing to make headway Monday. The euro, meanwhile, was undermined by growing uncertainty over who will take the helm at the European Central Bank later this year.

Asian markets had earlier rallied as investors there had their first chance to respond to Friday’s resignation of Mubarak. Tokyo’s Nikkei hit a nine-month high despite figures showing that China has officially overtaken Japan as the world’s second largest economy after shrinking during the fourth quarter of 2010.

“Friday’s news from Egypt was seen by some as a significant catalyst for equity markets,” said Yusuf Heusen, senior sales trader at IG Index. “Although Asia found support from these leads, Europe appears to be stumbling.”

In Europe, the FTSE 100 index of leading British shares was down around 3 points at 6,060 while Germany’s DAX rose 0.3 percent to 7,394. The CAC-40 in Paris was up 0.1 percent at 4,103.

Wall Street was also poised for a fairly subdued opening, with Dow futures up 5 points at 12,246 while the broader Standard & Poor’s 500 futures fell less than a point to 1,326.70.

After a big advance over recent weeks, which has sent the main U.S. indexes to their highest levels since June 2008, analysts said Monday’s flat performance was unsurprising, especially as the economic newsflow is light.

Tuesday is expected to be more eventful, with a raft of economic growth figures out of Europe and the latest estimate of inflation in Britain likely to dominate sentiment.

Investors will also be watching the monthly meeting of eurozone finance ministers later in light of renewed concerns over Europe’s debt crisis.

The flare-up in concerns is most evident in the big ramp up in Portugal’s borrowing costs in the markets and the recent drift in the value of the euro. That suggests that the “comprehensive solution” promised by EU leaders will need to be outlined soon.

Though the eurozone finance ministers are not expected to announce anything dramatic, the markets will be monitoring any statements to make sure that divisions about how to deal with the crisis are not growing.

The euro has also been undermined Monday by the increase in uncertainties over who will replace the European Central Bank’s president Jean-Claude Trichet later this year, following the decision by Germany’s Axel Weber to quit his post as Bundesbank post and not run for the ECB presidency.

The main reason behind Weber’s withdrawal is thought to have been his opposition to the European Central Bank buying up bonds of the more indebted countries in Europe.

“The euro is likely to remain pressured near-term by the increase in uncertainties about who will replace Trichet at the helm of the ECB in October and by ongoing concerns about peripheral debt,” said Jane Foley, senior currency strategist at Rabobank International.

By mid morning London time, the euro was 0.7 percent lower at $1.3453.

Earlier in Asia, Tokyo’s Nikkei 225 stock average climbed 1.1 percent to 10,725.54 — its highest close since May 6, 2010 — unfazed by confirmation from Japan’s government that China’s economy surpassed its own as the world’s second largest in 2010. And while gross domestic product shrank at an annualized rate of 1.1 percent in the October-December quarter, the contraction wasn’t as bad as forecast.

Hong Kong’s Hang Seng added 1.3 percent to 23,121.06 and Australia’s S&P/ASX 200 climbed 1.1 percent at 4,935.80. South Korea’s Kospi gained 1.9 percent to 2,014.59.

Mainland Chinese share markets rose on expectations that inflation data due out Tuesday would be lower than previously expected at just over 5 percent. The inflation rate in December was 4.6 percent compared with a 28-month high of 5.1 percent the month before.

The benchmark Shanghai Composite Index gained 2.5 percent to 2,899.13 and the Shenzhen Composite Index rose 2.3 percent to 1,262.11.

Benchmark crude for March delivery was down 28 cents at $85.30 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.15 to settle at $85.58 a barrel on Friday.

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Pamela Sampson in Bangkok contributed to this report.