Europe Trades Mixed, Banks Weigh on Asia

LONDON -- World stock markets were mostly lower Tuesday following big gains on Monday, with China's main index posting its biggest drop in three months after the country's central bank warned commercial banks to control their lending.

European shares were mixed, with the FTSE 100 index of leading British shares up 0.2%, and Germany's DAX flat. The CAC-40 in France fell 0.07%.

On Wednesday, Europe's main indexes closed more than 2% higher amid further hopeful signs about the global economic recovery, particularly out of the U.S.

Premarket futures suggest Wall Street will open mixed Tuesday after Monday's gains of over 1%.

Financial stocks fell in Europe after big gains on Monday, with Commerzbank down 2.5%, making it the biggest faller on the DAX. Deutsche BankDB was also down just under 2%. Meanwhile, Switzerland's UBS(UBS Quote) was down 2%.

Sentiment towards the banks in Asia was dented by the warning from China's central bank that commercial banks need to control their lending. As a result, China's Shanghai index tumbled 115.14 points, or 3.5%, to 3,223.53 -- its biggest retreat in three months -- as investors fretted over the warning. The index had been up 11.4% so far this month.

The warning comes ahead of the government's annual economic planning meeting and could foreshadow more measures to reduce liquidity in the months ahead.

In Britain, Lloyds Banking (LYG Quote) shares rose even though it confirmed it is planning to raise a British record of 13.5 billion pounds ($22.3 billion) via a rights issue in order to shore up its capital position and not take part in the government's Asset Protection Scheme.