World stocks eased on Tuesday as a five-day winning streak ran out of steam with investors tempering early optimism, but moves by the Bank of Japan to shore up its banking system helped to limit losses.
Data released by American Express and Citigroup showing U.S. credit card defaults rising to 20-year highs underscored the fragility of the global financial system, despite recent upbeat comments by banks such as Barclays and JPMorgan.
Investors also locked in profits ahead of a policy meeting by the Federal Reserve later in the day.
"Financials have had a tremendous run over the past few sessions and then we did have that bad debt news from Amex, which closed down having been sharply up earlier in the session," said Jim Wood Smith, strategist at Williams De Broe.
"Today we have got the key data for the commodity stocks, U.S. housing starts, which should be a very weak number. So I think people are just selling in front of that housing number."
The pan-European FTSEurofirst 300 index of top shares sagged over 1 percent.
Emerging stocks proved more resilient, up some 0.3 percent by 0950 GMT.
The MSCI main world equity index was flat, parsing earlier losses after news that the Bank of Japan would buy up to 1 trillion yen ($10.2 billion) of subordinated debt issued by banks to bolster their capital base.
The euro extended gains against the dollar while the dollar eased against a basket of major currencies after Germany's ZEW economic sentiment index rose to -3.5 in March from -5.8 in February, its highest level since August 2007.
However, concern over the economic slowdown in the euro zone remains acute — Spanish house sales showed a 39 percent fall in January from a year ago.
Appetite for government bonds remained mixed with June Bund futures down 14 ticks, two-year Schatz yields rising 5 basis points to 1.381 percent, and the 10-year Bund yielding 1.362 percent, down 4 basis points.
Emerging sovereign spreads were tighter by 2 bps.
Commodity prices remained volatile, with U.S. light crude down some 0.7 percent to trade at around $47 a barrel while gold was flat to trade at $920 per ounce.
