European Markets Trim Gains, Wall Street Slips

Despite the improvement in recent economic indicators, concerns linger about the global economy. With interest rates on government bonds edging higher, unemployment continuing to rise and oil prices at 2009 highs, investors are concerned about the sustainability of a potential recovery. As a result, there are worries in the market that if economic data around the world starts to disappoint expectations, then investors may have to reconsider their optimism.

And though the financial system may have been saved from collapse, investors still want more evidence that banks have started lending again to businesses and households. So far, there's very little to show that banks are doing anything other than improving their balance sheets.

"Equities are likely to bounce around for the next three months responding to good and bad news on a daily basis before a strong rally in the last quarter," said David Buik, markets analyst at BGC Partners.

Earlier, world stocks had been buoyed by the rise in commodity prices — which boosted the share price of producers — as well as by Tuesday's confirmation from the U.S. Treasury Department that ten of the country's biggest banks will repay nearly $70 billion of bailout money.

Particularly striking has been the rise in oil prices above $71 a barrel — a 2009 high — as investors poured money into crude as a hedge against a weakening U.S. dollar and inflation.