* Global index dips; Spanish, Italian shares tumble
* U.S. stock index futures down 0.2-0.3 percent
* Brent crude slips below $125 a barrel after strong gains
* Dollar index hits 1-month low
* U.S. FOMC minutes eyed
By Blaise Robinson
PARIS, April 3 European stocks fell and Brent
crude dropped below $125 on Tuesday, as concern that the euro
zone remained vulnerable to Spain's financial struggles eclipsed
recent enthusiasm following better U.S. and Chinese
European stocks dropped 0.5 percent, with the
Spanish stock index IBEX tumbling 1.4 percent, hit by
worries over Madrid's ability to tackle its debt burden while
its economy flounders.
The MSCI world equity index was down 0.1
percent at 1130 GMT, taking a breather after a two-day rally,
and U.S. stock index futures pointed to a lower open on Wall
Street. Futures for the S&P 500, Dow Jones and
Nasdaq 100 were down 0.2-0.3 percent.
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
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.
Madrid's IBEX has lost 7.4 percent so far this year,
strongly underperforming other euro zone markets such as
Germany's DAX, up 20 percent year-to-date, and France's
CAC 40, up 9.2 percent.
"The mood is improving in the United States, but in Europe
the temptation to book profits on stocks is high after the
recent strong gains as doubts remain, particularly over Spain
and Italy," Agilis Gestion fund manager Arnaud Scarpaci said.
"People are switching to more defensive stocks, such as
pharmas, while appetite for oil-related shares is also growing
with oil prices on the rise."
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
The dollar fell to a one-month low against a basket of
currencies on Tuesday, pressured by its fall to a three-week low
versus the yen as investors reduced recent hefty short positions
in the Japanese currency, and a recovery in the euro.
BRENT CRUDE DROPS BELOW $125
In pre-Easter trade, investors' focus was on the release of
the U.S. Federal Reserve minutes to the March meeting, due later
in the day, which will give further insight on how inclined
policymakers are to take additional easing steps to support the
Recent comments from Federal Reserve policymakers suggest a
high threshold for further Fed easing may be set and that they
probably want to see a marked deterioration in the recovery
before they would support another round of monetary stimulus.
Brent crude oil futures dropped $1 to $124.43 a
barrel, surrendering a portion of the previous session's sharp
gains after U.S. gasoline demand data weakened sentiment.
"I don't expect demand to pick up more than the seasonal
pattern, if at all," said Carsten Fritsch, an analyst at
Commerzbank in Frankfurt. "Talk about demand destruction will
continue and cap prices."
Earlier on Tuesday, Japan's Nikkei share average
fell 0.6 percent, although it managed to remain above 10,000, as
the yen rose to a three-week high against the dollar, triggering
a bout of profit taking on shares of blue-chip exporters.
German government bonds, seen by investors as a safer home
for cash in Europe, erased earlier losses as concern about the
weaker euro zone outlook mounted.
European Central Bank President Mario Draghi is expected to
acknowledge the relative weakness of the bloc's economy in
comments after Wednesday's interest rate-setting meeting and
suggest a wait-and-see attitude.
"Bunds are poor value. The global economy is not in such a
bad state as people feared," RIA Capital Markets bond strategist
Nick Stamenkovic said.