World stocks fall on Spain woes, oil slips

Global stocks fell and oil eased on Tuesday on increased concerns about Spain's financial struggles and investor caution ahead of the release of U.S. central bank meeting minutes.

Spain's financial problems underscored how vulnerable the euro zone remains.

Markets were focused, however, on Federal Reserve minutes from March due later in the day which could provide clues on the Fed's willingness to take further steps to ease monetary policy.

Fed officials on Monday signaled little appetite for further monetary steps to stimulate U.S. growth in an economy that is gradually strengthening.

Still, optimism about possible further stimulus from the Fed has helped fuel gains in stocks.

The MSCI world equity index was down 1.2 per cent, stepping back after a two-day rally, and U.S. stocks eased after the benchmark S&P 500 climbed to a 4-year high in the previous session. European stocks dropped 1 per cent.

The Dow Jones industrial average was down 56.31 points, or 0.42 per cent, at 13,208.18. The Standard & Poor's 500 Index was down 6.04 points, or 0.43 per cent, at 1,413.00. The Nasdaq Composite Index was down 4.18 points, or 0.13 per cent, at 3,115.52.

"We had a very strong first quarter and it was not surprising to see a spillover into yesterday. Today, on the other hand, may be a good chance to take a pause, especially as we head into earnings season," said James Dunigan, chief investment officer at PNC Wealth Management in Philadelphia.

Data Tuesday showing new orders for U.S. factory goods rebounded in February and firms increased orders for capital goods had little effect on markets.

The Spanish stock index IBEX tumbled 2.7 per cent, hit by worries over Madrid's ability to tackle its debt burden while its economy flounders.

Spain's debt will jump to its highest level since at least 1990 this year as the economy sinks into recession and borrowing costs rise, a document detailing the country's 2012 budget showed, pushing Spanish 10-year bond yields up to 5.43 per cent.

The number of registered Spanish jobless also rose for the eighth straight month in March as companies from all sectors continued to lay off staff.

Recent doubts over the pace of global economic growth and a conviction that the euro zone's debt crisis is far from over have given pause to a robust rally for stock markets in the first quarter.

Brent crude oil futures were down 13 cents at $125.30 a barrel, surrendering some of the previous session's sharp gains after U.S. gasoline demand data weakened sentiment.

The dollar was nearly flat against a basket of currencies.

European Central Bank policymakers meet on Wednesday with analysts saying a hawkish message from the bank on the need to get back to concentrating on quelling inflation instead of helping Europe's economy and financial system out of crisis may give the euro a brief boost.

"There hasn't been a risk event to push the dollar one way or another," said John Doyle, currency strategist at Tempus Consulting in Washington. "Later on today we get a peek at the Fed minutes but not expecting any surprises there, after that we are holding for the Europeans."

Copyright @Thomson Reuters 2012