European stock markets fell on Wednesday as investors weighed
worsening signs of recession in Europe's third largest economy and heightened fears that negotiations on avoiding a
Greek debt default had hit an impasse.
Stock indices in Germany, France, Italy and elsewhere were each down around 1 per cent at midday, even as Asian shares rallied overnight as
Apple Inc's stellar earnings report sent technology shares sharply higher.
France's CAC-40 index was down 1 per cent at 3,290 and Germany's DAX was 0.7 per cent at 6,375, while Britain's FTSE 100 index was down 0.6 per cent at 5,715.
Stocks were falling as key Greek bondholders met for a closed-door meeting in Paris to discuss how - and whether - to continue talks central to Europe's debt crisis.
The steering committee of the Institute of International Finance represents banks and other investment funds that hold a large part of Greece's debt and are being asked to
swap their exisitng bonds with new ones of a reduced value, longer maturity and lower interest rate.
German Chancellor Angela Merkel is expected to chart her course for the way out of Europe's crisis at a keynote speech at an economic forum in Davos, Switzerland later Wednesday. In an interview with major European newspapers published on Wednesday, the chancellor warned that the crisis was not over, despite European leaders efforts over more than two years.
Adding to market gloom was a report that Britain's economy shrank by 0.2 per cent in the last quarter of 2011, a worse-than-expected result that raises recession fears.
A closely watched index of German business optimism provided some relief. The monthly Ifo index rose for the third month in a row, but analysts remained largely skeptical.
The report "suggests that the economy is holding up relatively well, but activity is nowhere near strong enough to provide a meaningful boost to the eurozone's periphery," said Jennifer McKeown, senior European economist at Capital Economics.
After a session of slight losses on Tuesday, Wall Street appeared headed for a higher opening. Dow Jones Industrial Futures rose 0.1 per cent to 12,644 while S&P 500 futures added 0.2 per cent to 1,314.40.
Asian stocks posted solid gains. The Nikkei 225 index in Tokyo rose 1.1 per cent to close at 8,883.69. South Korea's Kospi gained 0.1 per cent to 1,952.23 and Australia's S&P/ASX 200 added 1.1 per cent to 4,271.30. Markets in Hong Kong, mainland China and Taiwan remained closed for Chinese New Year.
Honda Motor Corp. surged 3.8 per cent. Mitsubishi Motor Corp. jumped 4.4 per cent and Sony Corp. added 4.8 per cent. Tire-maker Bridgestone Corp. added 4.2 per cent.
Technology stocks were elevated after Apple Inc. reported earnings that sailed past analyst estimates. Apple said late Tuesday said it sold 37 million iPhones in the last three months of 2011, vastly exceeding estimates and propelling the company to record quarterly results.
That stellar performance reverberated throughout the global tech industry. South Korea's LG Electronics Inc., which ranks No. 2 globally in flat screen televisions, jumped 4.1 per cent. Hynix Semiconductor Inc., the world's second-largest memory chip maker, added 1.9 per cent.
Benchmark oil for March delivery rose 8 cents to $99.03 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 63 cents to end at $98.95 per barrel on the Nymex on Tuesday.
In currency trading, the euro rose to $1.3031 from $1.3021 late Tuesday in New York. The dollar rose to 77.98 yen from 77.73 yen.
Asian shares rallied overnight as Apple Inc's stellar earnings report sent technology shares sharply higher. 
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