LONDON Stock markets mostly fell on Wednesday as upbeat U.S. corporate earnings reports failed to ease investors' concerns over fading global economic growth.
Economic indicators have been mostly negative in recent weeks, particularly in Europe. Investor confidence in Germany has fallen, a sign of growing fears over the resilience of Europe's largest economy.
The International Monetary Fund on Tuesday lowered its outlook for the world economy this year, predicting that government spending cuts will slow U.S. growth and keep the euro currency countries in recession.
But analysts said the biggest reason for the market's drop was probably speculation that Germany could suffer a credit rating downgrade. Though several economists said it was unlikely, the rumor seemed to have been enough to batter European stocks.
By midday in Europe, Germany's DAX was down 1.2 percent to 7,588.69 while France's CAC-40 lost 1 percent to 3,652.17. The euro was down 0.1 percent against the dollar to $1.3156.
"Once again, fear rather than optimism is the overriding factor affecting European traders, and early market rumors of a German debt downgrade have seen the DAX lead the way lower," said Alastair McCaig, market analyst at IG.
In Britain, the FTSE 100 was 0.5 percent lower at 6,271.89 after Tesco, the country's largest supermarket operator, reported a sharp drop in profits. The company blamed costs at its Fresh & Easy U.S. operations, which it is trying to sell. It also sounded negative about Asian markets, announcing it would pull out of Japan and take a more measured approach to growth in China.
Labor market figures for the U.K. were also negative, showing unemployment rose by 70,000 in the three months to February. The number suggests the British economy is unlikely to stage a significant recovery in coming months.
Wall Street was headed for losses as well. Dow Jones industrial futures were down 0.3 percent to 14,635 while the broader S&P 500 futures shed 0.5 percent to 1,561.70.
Looking ahead, investors will keep an eye on the Federal Reserve's Beige Book, a regular report that is expected to show that activity in the world's largest economy is still only gradual.
Corporate earnings reports, which have been one of the few bright spots for markets so far this week, will also be in focus. Bank of America, American Express and eBay are among the bigger names to report earnings on Wednesday.
Earlier, Asian stock markets mostly closed higher thanks to gains in the U.S. the day before.
Coca-Cola, the world's biggest beverage maker, reported first-quarter earnings that beat Wall Street forecasts. As of Monday, 34 companies in the Standard & Poor's 500 had reported earnings and 20 had exceeded analysts' expectations.
U.S. home construction numbers were also positive, with builders starting construction on 1 million homes last month, the highest level since June 2008.
Japan's Nikkei 225 rose 1.2 percent to 13,382.89 as the yen weakened again, helping its many exporting companies. The dollar was up 0.4 percent to 97.96 yen.
Hong Kong's Hang Seng fell 0.5 percent to 21,569.67. Australia's S&P/ASX 200 advanced 1.1 percent to 5,004.60. Benchmarks in Indonesia, Malaysia and the Philippines also rose. South Korea's Kospi rose less than 0.1 percent to 1,923.84.
Benchmark oil for May delivery was down 79 cents at $87.93 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 1 cent on Tuesday.