US Markets

U.S. stocks furthered what had been lackluster gains Tuesday after the Financial Times reported the European Union was in discussions to double the size of its bailout fund. The Dow Jones Industrial Average added 108.95 points to 12,206.78, the S&P 500 added 7.43 points to 1,264.51, and the Nasdaq Composite rose 4.23 points to 2,659.99. Investors remained cautious following the latest chapter in the euro-zone debt crisis. In a surprise move, S&P on Monday put France, Germany and 13 other euro-zone nations on review for credit downgrades. The move underscores rising concern about the region's inability to tackle its debt woes. S&P also said it placed the long-term credit rating of the European Financial Stability Facility on credit watch negative. The move puts the bailout fund's rating on review for a possible downgrade. Yields on EFSF bonds jumped higher shortly after the announcement. Earlier, French President Nicolas Sarkozy and German Chancellor Angela Merkel said they will propose altering European Union treaties to bolster fiscal discipline. The agreement comes as expectations are rising that European leaders will announce bold moves at the EU summit later this week that tackle the debt crisis.

European Markets

European stocks fell Tuesday after Standard & Poor's Ratings Services warned it may downgrade the ratings of 15 euro-zone nations, including Germany and France. The Stoxx Europe 600 index fell 0.3% to end at 241.92. The losses came after S&P late Monday placed the long-term sovereign ratings of 15 euro-area nations on credit watch with negative implications. Investors are awaiting the meeting of the 27 European Union leaders in Brussels Friday where proposals put forward by Germany and France for tougher fiscal rules and treaty changes will be discussed. Germany's DAX 30 index dropped 1.3% to 6,028.82. Shares of RWE AG sank 7.2% to EUR28.15 after the energy group said it will raise around EUR2.1 billion ($2.8 billion) by selling shares to investors at a price of EUR26 a share. Also in the German utility sector, E.ON AG dropped 3.4%. Shares of Metro AG sank nearly 14% after the retailer lowered its 2011 forecast for sales and earnings. U.K. retail shares also posted losses, with Marks & Spencer Group PLC down 4.3% and Next PLC down 3.2%. The U.K.'s FTSE 100 index ended nearly unchanged at 5,568.72, up 0.01%. Shares of Wolseley PLC rallied 3.6% after the specialist trade distributor of plumbing and heating products reported a 16% rise in fiscal first-quarter trading profit. In Paris, retailer Carrefour SA dropped 6.3%, weighing on the CAC-40 index, which slipped 0.7% to 3,179.63. Shares of Veolia Environnement SA fell 4.5% after the French waste and water utility said it plans to divest EUR5 billion in assets in the next two years.

Asian Markets

Asian stock markets ended lower Tuesday, with investors unsettled after Standard & Poor's warned of possible ratings downgrades for much of the euro zone. Hong Kong's Hang Seng Index lost 1.2%, while the Shanghai Composite Index slipped 0.3%. Japan's Nikkei Stock Average dropped 1.4% and South Korea's Kospi fell 1%. Hong Kong banks traded broadly weaker in the wake of S&P's warning, with Agricultural Bank of China down 1.7% and Bank of China down 1.8%, while HSBC Holdings PLC fell 1% after the lender received a large fine from U.K. regulators over the sales of some securities to retail investors. Most Japanese banks also lost ground, with Nomura Holdings and Mizuho Financial Group each down 1.9%. Metal-sector firms were lower, with Sumitomo Metal Mining down 1.8% and JFE Holdings off 4.1% in Tokyo, and Jiangxi Copper down 3.1% and Angang Steel down 3.8% in Hong Kong. Hong Kong-listed Esprit Holdings plunged 10.5% after its chief financial officer resigned for personal reasons amid a major ongoing restructuring of the company. China Vanke Co.'s shares gained 2.2% on the Shenzhen bourse. China's top real-estate developer reported a 36% year-on-year sales drop in November. Still, Credit Suisse strategists said that the firm has already achieved 89% of its target for the year and that its leverage remains low. However, many Hong Kong-listed property firms were weaker, with China Resources Land Ltd. down 2.5%, and China Overseas Land & Investment Ltd. off 5.8%.

Commodities

Base metals closed mostly in negative territory on the London Metal Exchange Tuesday as market participants kept to the sidelines amid a lack of clarity over the situation in the euro zone. At the close, LME three-month copper was 1.3% lower on the day at $7,834 a metric ton. The red metal's closing price was well above its intraday low of $7,752/ton, however, after strong German factory order data lifted sentiment. German factory orders bounced 5.2% in October from the previous month, far exceeding expectations. Crude-oil futures wavered between small gains and losses in U.S. trading Tuesday, as investors remained concerned about Europe in the aftermath of S&P's ratings warning but the dollar came off its highs. Light, sweet crude for January delivery settled 29 cents higher at $101.28 a barrel on the New York Mercantile Exchange. Trading remained cautious following Monday's announcement from Standard & Poor's that the ratings agency had placed 15 euro-zone nations on review for credit downgrades due to the deepening political and economic crisis. Reports of the announcement surfaced shortly before Monday's close and squelched a rally that had earlier sent Nymex futures surging above $102 a barrel. Gold futures eased as the risk of further credit-rating downgrades in the euro zone made some traders uneasy about holding precious metals. The most-actively traded gold contract, for February delivery, fell $2.70, or 0.2%, to settle at $1,731.80 a troy ounce on the Comex division of the New York Mercantile Exchange.