U.S. stocks erased their morning losses Wednesday, moving tepidly into positive territory in afternoon trading, though global concerns continued to weigh on sentiment ahead of a meeting of world leaders. The Dow Jones Industrial Average edged up three points to 11349 after spending the morning in negative territory.

The Standard & Poor's 500 stock index added four points to 1217 while the Nasdaq Composite gained 12 points to 2575. Energy stocks helped lead the recovery as oil jumped to nearly $88 a barrel, a two year high. Chevron rose steadily throughout the day to add 1.7% on the day, making it one of the best market performers.

Exxon Mobil gained 0.5%, as crude oil prices rose to a fresh two year high after government data showed a continuing decline in oil and fuel stockpiles. Financial stocks were also strong, with Bank of America adding 2.2% and J.P. Morgan rising 1.6%. Leading the decliners were utilities, consumer staples and telecommunications companies, with AT&T and Verizon dropping 0.7% and 0.6%, respectively.

Boeing, however, led the fall among Dow components, tumbling 3% after a Boeing 787 Dreamliner made an emergency landing in south Texas after the crew reported smoke in the cabin. The emergency is the latest setback for the Dreamliner, which is running nearly three years behind its original schedule.

European markets

European stock markets dropped Wednesday, as concerns escalated over sovereign debt problems in the euro zone and Wall Street lost ground. The Stoxx Europe 600 index fell 0.7% to close at 271.48, giving back all of the gains earned in the prior session when it reached a closing high for 2010.

U.S. stocks contributed to the selling pace for Europe, with Wall Street off despite a fall in jobless claims and a narrower trade deficit. Lower metals prices put pressure on the FTSE 100 index, which ended 1% lower at 5,816.94. Shares of Kazakhmys PLC fell 3.8% and Lonmin PLC slumped 4.6%. European markets also got rattled by a further jump in Irish government bond yields and mixed results from an auction of government debt in Portugal. The Irish ISEQ index slid 1.5%, while the Spanish IBEX-35 index lost 1.7%.

Italy's FTSE MIB index dropped 2.4%. In Paris, the CAC-40 index slipped 1.5% to close at 3,888.45. Shares of French investment bank Natixis SA tumbled 12.2%. Third-quarter earnings released late Tuesday fell short of analyst forecasts. The German DAX 30 index fell 1% to end at 6,719.84, a day after marking a new 2010 closing high and a new 52 week high. Keeping pace with losses for other European banks, Deutsche Bank AG fell 2.3%.

Asian markets

Asian shares ended mixed Wednesday as worries about more policy tightening by Beijing hit Chinese banks and property stocks in Hong Kong and on the mainland. Japan's Nikkei Stock Average ended 1.4% higher at 9,830.52, its highest finish in more than four months; also finishing higher were South Korea's Kospi, up 1.0%, and Taiwan's Taiex, up 0.1%. On the down side were Hong Kong's Hang Seng Index, off 0.8% and the Shanghai Composite, off 0.6%.

Chinese banks fell after the People's Bank of China planned to raise the reserve requirement ratio at selected banks, including some of the country's largest state owned lenders, by 0.50 percentage point Monday, said two people familiar with the situation. ICBC fell 0.8% in China and dropped 1.9% in Hong Kong while Bank of Communications A shares were down 2.1% and its H-shares slid 2.9%.

Property developers took a hit on worries that Beijing may also raise interest rates soon after Thursday's release of October inflation data. Economists expect China's consumer price index to have risen 4.0% in October from a year earlier due to higher food prices, accelerating from September's 3.6% rise.

Base metals

Base metals closed lower on the London Metal Exchange Wednesday after weak Chinese import numbers dented confidence and a stronger dollar weighed on the markets. Market participants said the metals were in consolidation after new figures showed copper imports into China, the world's top metals consumer, totaled just 273,511 metric tons in October, down 26% from the previous month. But the markets are expected to see further gains in the sessions ahead, with analysts predicting copper may soon near or potentially surpass its record high of $8,940/ton.

Copper closed down 1.2% on the day, but is still up 5.2% on the week. Tin, which closed down 1.5%, matched its all time high of $27,500 in early European trade and still trades near record levels. Oil futures settled $1.09 higher at $87.81 a barrel, hitting a fresh two year high Wednesday after the U.S. Department of Energy reported oil and fuel stockpiles declined last week, continuing a nearly two-month slide from 27-year highs.

Light, sweet crude oil for December delivery hit an intraday high of $88.02 on the New York Mercantile Exchange, the highest level since October 2008. Oil inventories fell 3.4 million barrels for the week ended Nov. 5, the Energy Department's Energy Information Administration said Wednesday. It was the biggest week to week drop in crude oil stocks since July 9. Stocks were seen rising by 800,000 barrels, according to a Dow Jones Newswires survey.

Gold futures fell below $1,400 an ounce as strength in the dollar reduced demand for the precious metal as a currency hedge. The most actively traded gold contract, for December delivery, settled down $10.80, or 0.8%, at $1,399.30 an ounce on the Comex division of the New York Mercantile Exchange. Wednesday's decline ended a streak of four consecutive days of gains, during which gold climbed 6.5% to set a record intraday high of $1,424.30.

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