LONDON -- U.S. markets are likely to fall sharply at the open, with the Dow Jones Industrial Average (INDEX: ^DJI ) looking likely to reverse most of the gains made yesterday. CNN's Fear and Greed Index remains in "Extreme Fear" territory, and close attention will be paid to pending home sales figures, which are due at 10 a.m. EDT. A Reuters survey suggests a 0.1% increase, down from March's 4.1% rise.
In Europe and Asia, markets returned firmly to "risk off" mode today. Last night, China's official news agency reported that any stimulus measures applied to the region's largest economy will be much smaller than during the 2008 and 2009 financial crisis. In Europe, concerns over Spain's economic woes intensified, driving stocks down and bond yields up.
Earlier this morning, Spanish economy minister Luis de Guindos issued a statement saying that Bankia SA would be recapitalized using bonds issued by the Spanish bank rescue fund, signifying that the previous plan of using Spanish government debt had been abandoned. A surprise announcement revealing the governor of Spain's central bank is to stand down early also caused concern.
European bond yields reflected anxiety over the eurozone, with the yield on Spanish 10-year debt rising to 6.7% in trading this morning. An Italian bond auction saw the yield on its 10-year debt broach 6%, while the yield on U.K. and German 10-year bonds fell to new lows of 1.709% and 1.318%, respectively.
In company news, blue-chip shares fell heavily in London trading, with banking and mining shares falling out of favor once more. Lloyds Banking (NYSE: LYG ) was the worst-hit bank, while Rio Tinto (NYSE: RIO ) led the falls among the miners. Overall, the FTSE 100 (INDEX: ^FTSE ) , DAX, and CAC 40 were all down by around 1.5% at the end of the morning, although Spain's IBEX 35 recovered slightly from early losses of more than 2%.
Meanwhile, shares in one of Warren Buffett's recent investments, General Motors (NYSE: GM ) , lost 2% in German trading following confirmation of a forthcoming announcement relating to its Chevrolet brand and British soccer club Manchester United.
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No major company earnings announcements are due today, but shares of Research In Motion may fall further after yesterday's surprise announcement that the company expects to record a first-quarter operating loss.
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