By and  on October 13, 2011

Financial stocks led markets down on both sides of the Atlantic today as J.P. Morgan reported weaker quarterly profits and European banks were told to hold more money in reserve given the continent's debt crisis.

In the U.S., the S&P Retail Index fell 0.4 percent, or 2.06 points, to 528.79 as trading settled and the Dow Jones Industrial Average retreated 0.4 percent, or 40.72 points, to 11,478.13. Most retail stocks lost ground including The Wet Seal Inc., down 8.9 percent to $4.10; Abercrombie & Fitch Co., 2.6 percent to $68.96; J.C. Penney Co. Inc., 1.8 percent to $29.70, and Wal-Mart Stores Inc., 0.3 percent to $55.01.

Liz Claiborne Inc. added to its 34 percent gain Monday, which was driven by a deal to sell its namesake brand to Penney, and rose 2.9 percent to $7.04. After the closing bell, Moody’s Investors Service placed Claiborne’s debt on review for possible upgrade.

Markets were shakier in Europe. Milan’s FTSE MIB fell 3.7 percent, while Paris’ CAC 40 and Frankfurt’s DAX both tumbled 1.3 percent. London’s FTSE 100 shrank 0.7 percent.

The European Banking Authority said the region’s banks need to raise a total of 200 billion euros, or $276 billion, to insulate themselves against any future turmoil in the markets.

Additionally, credit watchdog Fitch Ratings downgraded Royal Bank of Scotland, which had been bailed out by the U.K. taxpayer following the credit crisis of 2008, as well as Lloyds. Both banks saw their ratings fall to "A" from "AA-minus."

Retail and luxury stocks put in a mixed performance. The day’s biggest winners included, Hermès, which rose 2.1 percent; Inditex, which climbed 2.0 percent, and French Connection, which advanced 2.3 percent.

Markets were up in Asia with the Hang Seng Index gaining 2.3 percent in Hong Kong and the Nikkei 225 rising 1 percent in Tokyo.

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