Fears about Greece's debt crisis battered U.S. stocks again Tuesday, with a market rally all but evaporating in the session's final hour following reports that the heavily indebted country's negotiations with international inspectors may drag on and could still fall apart.

Dow Jones

The Dow Jones Industrial Average ended up 7.65 points, or 0.07%, at 11408.66, with its gain representing a fraction of the nearly 149 points it had risen earlier in the session. The measure had neared the break even point for 2011 midday Tuesday as traders bet on a rescue for Greece and more stimulus from the Federal Reserve, which will release a much-awaited policy statement Wednesday. The Standard & Poor's 500-stock index lost 2 points, or 0.17%, to 1202.09, for its second-straight loss. The Nasdaq Composite ended down 22.59 points, or 0.86%, at 2590.24. Stocks sank late in the session on reports that the so called troika of the International Monetary Fund, European Commission and European Central Bank were expected to return to Athens in October, suggesting no immediate help to stave off the country's debt crisis. In addition, The Wall Street Journal reported that Greece's talks with the inspectors were ongoing and could still fall apart. Netflix was the weakest stock in the S&P 500, shedding 9.5%, extending its decline after the stock closed at its lowest level in about a year Monday. The swoon follows the company's announcement that it was separating its DVD by mail business and its Internet movie streaming service.

EU Stock Markets

European stock markets ended higher Tuesday, buoyed by hopes that Greece will get its next round of funding and the Federal Reserve will inject some stimulus into the U.S. economy. The Stoxx Europe 600 index rose 1.8% to close at 229.10. The International Monetary Fund, meanwhile, cut its forecast for global growth Tuesday, citing slow private sector demand, sovereign debt and bank troubles. The markets shrugged off a cut in Italy's credit ratings by one notch at Standard & Poor's. Italy's FTSE MIB index rose 1.9%, with auto maker Fiat SpA up 7.2%. Markets stayed hopeful that Greece would get a fresh injection of aid, amid media reports the country was close to agreement. A call involving Greek Finance Minister Evangelos Venizelos, the IMF, the European Commission and the European Central Bank Monday was productive. Another call with the so called troika was taking place Tuesday. Still, the ASE Composite index fell 0.7% in Athens. In Paris, shares of Societe Generale SA dropped 3.1%. Among other banks, BNP Paribas SA fell 6.5% and Credit Agricole SA dropped 2.1%. The French CAC 40 index rose 1.5% to close at 2,984.05, however, aided by a 3.2% gain for pharmaceutical group Sanofi SA after a ruling in its favor by a U.S. district court over India-based Sun Pharmaceutical Industries Ltd. Luxury-goods group LVMH Moet Hennessy Louis Vuitton added 3.6%, amid broad gains for the retail sector. The FTSE 100 index gained 2% to close at 5,363.71 as retailers and miners added to gains from drug stocks. GlaxoSmithKline PLC gained 2.2%, Burberry Group PLC rose 3.5% and Kingfisher PLC added 2.7%. Shares of retailer Metro AG rose 3.6% in Germany, while sportswear maker Adidas AG gained 3.7%. The German DAX 30 index rose 2.9% to settle at 5,571.68.

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Asian Sharemarkets

Asian shares ended mixed Tuesday after choppy trade, as a downgrade of Italy's sovereign debt rating deepened worries about the euro-zone debt crisis, with euro-exposed exporters losing ground in Tokyo. Japan's Nikkei Stock Average led losses as it returned from three day holiday weekend. The index ended down 1.6%. But after choppy trade, Hong Kong's Hang Seng Index ended 0.5% higher, the Shanghai Composite Index gained 0.4% and South Korea's Kospi was up 0.9%. India's Sensex tacked on 2.2%. Weighed by the downgrade, the euro lost ground against the yen, pressuring exposed exporters in Tokyo. Sony lost 4.1%, Nikon slipped 3.1% and Honda Motor surrendered 3.1%. Dai-ichi Life Insurance also dropped 6.3%, hurt by the S&P action as the company said it held a total of Y330 billion of Italian and Spanish government bonds as of end-June. On the upside, Suzuki Motor added 3.0% after a Sunday report in Germany's Der Spiegel magazine that Volkswagen AG won't rule out taking a majority stake in the Japanese auto maker.

Commodities

Base metals closed mostly lower on the London Metal Exchange Tuesday following a session of choppy trade that saw flagship copper hit a new low for the year. At the close, LME three-copper was 0.8% lower on the day at $8,300 a metric ton, having previously fallen to $8,225.75/ton, its lowest price since Nov. 30. Only nickel and lead closed the day in positive territory, gaining 1.3% and 0.8%, respectively. Oil futures halted a two-session slide Tuesday that had erased more than 5% of their value on optimism that U.S. central bankers will soon announce steps to stimulate the U.S. economy. Light, sweet crude for October delivery settled up $1.19, or 1.4%, at $86.89 a barrel on the New York Mercantile Exchange. The October contract expired Tuesday. the November Nymex contract settled up $1.11, or 1.3%, at $86.92. November Brent crude contracts on the ICE Futures Europe exchange also advanced, settling up $1.40, or 1.3%, at $110.54 a barrel. Gold futures reclaimed $1,800 an ounce Tuesday and silver rose above $40 an ounce as investors saw a bargain in both metals' drop to multi-week lows the previous day. Gold and silver continued to draw support as investors remain cautious on the outlook for Europe's debt crisis and the Federal Reserve's policy committee meeting. The most actively traded gold contract, for December delivery, rose $30.20, or 1.7%, to $1,809.10 a troy ounce on the Comex division of the New York Mercantile Exchange. Silver for December delivery rose 2.5% to $40.137 a troy ounce Tuesday.

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