A relative calm came to global equity markets Tuesday, with stocks generally giving back just a small portion of the massive gains they made a day earlier in the wake of Europe’s nearly $1 trillion plan to bail out Greece and other cash-strapped European countries.

This story first appeared in the May 12, 2010 issue of WWD. Subscribe Today.

U.S. retail stocks slipped 0.2 percent on Tuesday as the Dow Jones Industrial Average fell 0.3 percent.

But investors were also busy hedging their bets by moving assets to safer havens. The euro fell against the dollar, slipping to $1.267 from $1.278, and gold futures for June delivery rose $31.60 to $1,232.40 an ounce.

People have seen that there are more problems in the Euro[zone] than they had thought and they’re a little bit nervous,” said David Wyss, chief economist at Standard & Poor’s. “I don’t think we’re completely out of the woods yet, but Europe finally stepped up to the plate here and hopefully a trillion dollars is going to keep the markets at bay for a while.”

Wyss said some investors are also taking what profits they can and pulling out for summer, which is typically a slow time on Wall Street. The S&P Retail Index slipped 0.83 points to 467.86 Tuesday, giving back some of Monday’s 5.7 percent rise. The Dow fell 36.88 points, to 10,748.26 following a 3.9 percent gain Monday.

The FTSE 100 declined 1 percent to 5,334.21 in London and the CAC 40 receded 0.7 percent to 3,693.20 in Paris. The Hang Seng Index fell 1.4 percent to 20,146.51 in Hong Kong as the Nikkei 225 dropped 1.1 percent to 10,411.10 in Tokyo.

The European debt crisis, which was sparked by the troubles in the relatively small nation of Greece that echoed around the world, laid bare tensions in the union.

“The problem with the euro is that you’ve got a north-south divide,” said Bill Rhodes, chief investment strategist at Rhodes Analytics, noting the Mediterranean countries were previously more prone to inflationary polices than their northern counterparts.

“That has created this stress between national governments,” Rhodes said. “If you are a European state…you can run a deficit and throw it back to the EU. Does the euro, and by extension the EU, survive or is there some sort of gravitational effect that throws some countries out?”

Rhodes pointed out that the questions come at a time when the global economy is being wracked by a host of concerns, from the Gulf of Mexico oil spill and the failed effort to bomb Times Square to the Icelandic volcano that is still disrupting air travel and turmoil at the top of the U.K.’s political establishment. David Cameron stepped up as prime minister Tuesday night as a new coalition government took the reins in Britain.

Among the U.S. retail decliners was J.C. Penney Co. Inc., which slid 1.9 percent to $29.07 after J.P. Morgan analyst Charles Grom downgraded the stock to “neutral” from “overweight,” in part over concerns that it was more than just bad weather that hurt retail sales in recent weeks.

“With unemployment elevated, consumers are still very vulnerable to market shocks and geopolitical issues,” said Grom, who nonetheless expects consumer confidence and spending to continue to improve.

The analyst also sees more competition for the midtier shopper from Macy’s Inc., which got a boost from S&P. The rating agency raised the corporate credit rating on the firm to “BB-plus” from “BB.” The outlook on the rating is stable.

“The upgrade reflects Macy’s above-average performance in the past two quarters, expectations for continued positive operational trends, and the substantial debt repayment of about $1.5 billion over the past 15 months,” said S&P debt analyst David Kuntz.

One more step up would rid Macy’s debt of its noninvestment or “junk” status. Shares of Macy’s decreased 0.3 percent to $23.90.

Running countertrend was Zale Corp., which saw its stock rise 3.7 percent to $3.11 following the jeweler’s deal to secure a $150 million five-year senior secured loan from Golden Gate Capital, which will receive warrants to purchase a quarter of the firm’s common stock once shareholders approve the deal.

“With the completion of our financial restructuring, we will now be able to focus 100 percent of our time on key merchandising, in-store and marketing initiatives to grow sales and return to profitability,” said Theo Killion, president and interim chief executive officer.

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