| NEW YORK
NEW YORK Shares in Europe and the United States dipped on Tuesday, dropping modestly for a second straight day amid signs of slowing economic growth.
Doubts grew over Spain's willingness to ask for an aid package, raising new concerns about Europe's debt crisis and the euro, while bellwether FedEx cut its profit forecast, darkening the corporate earnings outlook.
In addition, the Swiss government cut its growth forecast for this year and next.
Equities are coming off the strong gains made last week when the Federal Reserve promised to keep pumping money into the U.S. economy and the euro zone's bailout fund got crucial backing from a German court. The Standard & Poor's 500 Index climbed to multi-year highs while European shares reached a 14-month peak.
Many investors said the pullback this week was to be expected as investors took profits and had no major catalysts. The FTSEurofirst-300 Index .FTEU3 closed 0.4 percent lower while the S&P 500 slid 0.1 percent. A Morgan Stanley index of global stocks .MIWD00000PUS fell 0.43 percent.
"The market is digesting not only the gains from last week, but really the move you've had up over the last six weeks," said Seth Setrakian, partner and co-head of U.S. equities at First New York Securities in New York. "Now, fundamentals and actual news have to come through, versus just the central bank trying to juice everything up."
FedEx Corp (FDX.N) cited weakening global economic conditions for its reduced 2013 profit outlook. Its stock fell 3.1 percent to $86.55.
However, Apple Inc (AAPL.O), the most valuable U.S. company, continued its meteoric rise as consumers sign up for the new iPhone. Its shares, up more than 70 percent so far this year, closed at a new high of $701.91.
Investors are becoming worried that Spain may try to avoid accepting what would be a politically unpopular European Union/ International Monetary Fund bailout. Requesting aid is a condition for the European Central Bank to start buying bonds of any troubled euro-zone government.
"We take the view that delaying tactics by the Spanish government to request aid could backfire and lead to renewed upward pressure on yields because markets are effectively assuming that an aid request is more or less a done deal," said Rabobank economist Elwin de Groot.
Uncertainty was evident in bond markets. German Bund prices rose 0.26 percent as the reversal of the recent falls continued, though borrowing costs for Italy and Spain eased.
Ten-year Spanish bond yields dipped back below the 6 percent barrier that was breached on Monday after a successful auction of short-term debt.
The euro dropped 0.58 percent. The yen was also pressured, with speculation that the Bank of Japan might loosen policy on Wednesday following last week's move by the U.S. central bank.
The Dow Jones industrial average .DJI was up 11.69 points, or 0.09 percent, at 13,564.79. The Standard & Poor's 500 Index .SPX was down 1.87 points, or 0.13 percent, at 1,459.32. The Nasdaq Composite Index .IXIC was down 0.87 points, or 0.03 percent, at 3,177.80.
The benchmark 10-year U.S. Treasury note was up 11/32, the yield at 1.8031 percent.
Inflation expectations spiked on Friday after the Fed's QE3 announcement but have retreated from their highest level since 2006 with weaker equity and oil prices, according to analysts.
A measure of longer-term inflation expectations is the yield premium, or inflation breakeven rates, on regular Treasuries over Treasury Inflation-Protected Securities, or TIPS. The 10-year TIPS breakeven rate, which gauges investors' inflation expectations, was 2.57 percentage points midday Tuesday, down 3 basis points from Monday's close. It rose above 2.70 points on Monday, analysts said.
Sterling, as well as the Australian and New Zealand dollars, softened against the U.S. currency after all three had made recent sharp gains. The Aussie slipped after the Australian central bank left the door open for a rate cut.
"Unless we get this (Spanish) uncertainty out of the way, we expect the euro to face some resistance around its highs," said Adam Myers, senior currency strategist at Credit Agricole.
Comments by Belgian ECB policymaker Luc Coene also put downward pressure on the euro. He said Monday that an interest-rate cut, charging banks to deposit cash and a new offer of ultra-cheap long-term funding were all potential options for the ECB.
Oil prices, up almost 10 percent since early August, extended Monday's decline by dropping 1.6 percent on economic growth concerns, which could weigh on demand prospects. Brent crude is down almost 4 percent over the past two sessions.
Spot gold prices reversed an earlier decline to trade at $1,769.64 an ounce, up from $1,760.95 at Monday's New York close.
"Investors are really in defensive mode today, and probably will stay that way until Thursday, when we get the fresh read on manufacturing out from China," said Juliana Roadley, a market analyst at Commonwealth Securities.
A preliminary reading of China's purchasing managers' index for September is due on September 20, along with similar data from the United States and Europe.
(Additional reporting by Chuck Mikolajczak; Editing by Chizu Nomiyama; Editing by Dan Grebler and Jan Paschal)