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European Concerns Drive Markets Down

Although a successful auction of Italy’s debt earlier on Wednesday initially boosted Europe’s markets, the effect petered out by the end of the day.

A view inside the Stock Exchange.

After earlier gains, Europe’s major indices all closed down when they ended Wednesday’s trading sessions. The FTSE 100 in London dipped 0.1 percent to 5,507.40, while the CAC 40 in Paris was down 1 percent to 3,071.08. The DAX in Frankfurt fell 2 percent to 5,771.27, and the FTSE MIB in Milan slipped 0.9 percent to 14,796.55.

Although a successful auction of Italy’s debt earlier on Wednesday initially boosted Europe’s markets, the effect petered out by the end of the day. The Italian government auctioned 9 billion euros’ worth of six-month bills at a yield of 3.25 percent, half the borrowing costs the country had paid on its debt in November. But investors were still said to be concerned over the performance of Italy’s longer-term debt, which is set to be auctioned today. Meanwhile, the borrowing costs on Italy’s 10-year bonds were still high at 7 percent, which is viewed as an unsustainable level for the country.

In earlier trading Wednesday in Asia, Tokyo’s Nikkei 225 ended unchanged at 8,423.62, while Hong Kong’s Hang Seng Index declined 0.6 percent to 18,518.67.

The U.S. markets were impacted by news from the European Central Bank stating that banks placed $590.72 billion with the ECB overnight, an indication that European banks would rather earn low interest rates than lend to one another, even on a short-term basis. That news pushed the euro down to $1.294, the lowest level against the dollar in 11 months.

In the U.S., the Dow Jones Industrial Average fell 1.1 percent to 12,151.41. The S&P Retail Index was also down 1.1 percent, to 524.47.

Most U.S. retail stocks fell during a day of relatively light trading, including Sears Holdings Corp., which said Tuesday it would close between 100 and 120 Kmart and Sears full-line stores as it attempts to rejigger operations to cut losses and restore profitability. Shares of Sears fell 0.2 percent, or 5 cents, to close at $33.33.

Other retail losers were Abercrombie & Fitch Co., which saw its shares fall 2.4 percent, or $1.19, to $47.99. Shares of Bebe Stores Inc. declined 2.1 percent, or 18 cents, to $8.29. Shares of teen retailer Hot Topic Inc. were down 3 percent, or 21 cents, to $6.82.

Among department stores, shares of Macy’s Inc. rose 1.2 percent, or 39 cents, to $32.67, while Kohl’s Corp. ticked up .4 percent, or 22 cents, to $50.09. Another gainer was J.C. Penney Co. Inc., whose shares rose 0.1 percent, or 5 cents, to $35.34.

One surprise was American Apparel Inc., whose shares rose nearly 2 percent, or 1 cent, to 76 cents. The biggest gainer for the over-the-counter trading session was Bluefly Inc., up 21.1 percent, or 35 cents, to $2.