Asian markets reverse early gains after Australia rate decision; European stocks fall

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World stock markets fall amid recovery doubts

HONG KONG — World stocks fell Tuesday as enthusiasm over positive U.S. economic reports gave way to worries about the global recovery’s strength after Australia surprised investors with its decision to leave interest rates unchanged.

Asian shares were up early in the day after Wall Street broke out of its recent lull but couldn’t hold their advance. European markets opened lower. The dollar gained against the euro and fell against the yen, while oil prices headed toward $75 a barrel.

U.S. reports on Monday pointed to gains in manufacturing and personal spending, adding to signs of recovery after last week’s strong economic growth data and raising investors’ hopes ahead of monthly jobs figures.

But investors later succumbed to more fretting about the staying power of the economic turnaround after Australia’s central bank left its key interest rate unchanged at 3.75 percent.

The first major economy to raise interest rates since the outbreak of the financial crisis, Australia was widely expected to hike rates a fourth time in a row but opted instead to wait until the effects of its previous moves became clear.

More worrisome for investors, the country’s central bank noted Chinese efforts to pull back stimulus measures and growing concerns about the financial health of some governments — a reminder of two key factors that have sent global markets lower of late.

“It’s very bearish for sentiment right now,” said Peter Lai, investment manager at DBS Vickers in Hong Kong. “The markets could keep swinging wildly.”

Europe followed Asia down, with Britain’s FTSE 100 off 0.3 percent, Germany’s DAX losing 0.4 percent and France’s CAC-40 lower by 0.5 percent. U.S. futures pointed to more selling on Wall Street Tuesday. S&P futures slipped 1.9 points, or 0.2 percent, to 1,084.40.

Earlier, a number of Asian markets reversed their early gains to finish lower.

Up nearly 2 percent at one point, Shanghai’s index shed 0.2 percent amid speculation of more government initiatives to clamp down on bank lending.

South Korea’s Kospi fell 0.7 percent. Markets in India, Taiwan and Singapore also lost ground.

Among Asia’s best performing markets, Japan’s Nikkei 225 stock average jumped 166.07, or 1.6 percent, to 10,371.09. Hong Kong’s market closed up 0.1 percent in volatile trade, while Australian stocks also rose.

In the U.S. Monday, the Dow rose 118.20, or 1.2 percent, to 10,185.53, its biggest gain since Jan. 4.

The broader Standard & Poor’s 500 index rose 15.32, or 1.4 percent, to 1,089.19. The Nasdaq composite index rose 23.85, or 1.1 percent, to 2,171.20.

In oil, benchmark crude for March delivery was up 33 cents at $74.74 a barrel. The contract rose $1.54 to settle at $74.43 on Monday.

The dollar was down at 90.53 yen from 90.59 yen. The euro was slightly lower at $1.3924 from $1.3928.