By Michele Maatouk European stocks eased off early highs and the euro slipped against the dollar Wednesday in response to weak figures for euro-zone retail sales. Spanish bond yields crept up after the government failed to sell the maximum targeted amount at auction. The euro hit its low for the day after October retail sales figures for the currency bloc indicated the largest year-on-year fall since 2009. "A 1.2% plunge in retail sales volumes in October fuels concern that consumer spending will be very weak across the euro zone in the fourth quarter and will drag down gross domestic product," said Howard Archer, chief U.K. and European economist at IHS Global Insight. The euro-zone purchasing managers' index disappointed markets too. Although private business activity shrank at a slower pace than in October, the composite PMI remained below the 50 threshold that separates expansion from contraction. Sterling nudged lower against the greenback, after the U.K. PMI also fell short of expectations. Gilts were lower too as investors awaited a government update on the economy and its budget for next year at 1230 GMT. Also Wednesday, the U.K. budget watchdog is expected to lower its growth forecasts. Spanish government bond yields nudged up after its treasury failed to raise the maximum targeted amount at an auction of three-, seven- and 10-year bonds. Spain's 10-year yield rose 10 basis points to 5.33%, according to Tradeweb. Annalisa Piazza at Newedge said she wouldn't read too much into the market reaction as Spain has already covered its financing needs for 2012 and Wednesday's sale was only to pre-fund spending in 2013. "We suspect the market correction is just temporary and probably due to some profit-taking. We don't see it as an harbinger of rising yields for the euro-zone periphery's debt," she said. Overall, the mood in the markets remained relatively upbeat, and basic-resource issues propped up European equities. The Stoxx Europe 600 resources index rose 1.8% after China's new leader, Xi Jinping, made some encouraging statements about the economy, raising expectations for continued government support. The sector is heavily dependent on demand from China. Well-received corporate news also supported the tone. Shares in retailer Tesco rose after the company said it is conducting a strategic review of Fresh & Easy in the U.S. Shore Capital interpreted that as a signal that Tesco will exit the U.S. and is seeking to achieve the best outcome for investors. HSBC gained following an agreement to sell its entire holding in Ping An Insurance Co of China, while Nokia shares jumped after the company said it is launching a new Windows-based Lumia handset in partnership with China's biggest operator, China Mobile. U.S. futures pointed to a slightly higher open on Wall Street, where all eyes will be on the ADP employment report later, which is widely considered a precursor to Friday's key nonfarm payrolls. The Institute for Supply Management non-manufacturing index is also due. Latest Price Change From Previous Close FTSE 100 5886.35 +0.3% DAX 7454.13 +0.3% CAC-40 3593.59 +0.4% Stoxx Europe 600 276.91 +0.2% Hang Seng 22267.65 +2.1% Nikkei 225 9468.84 +0.4% Shanghai Composite 2031.91 +2.9% Dow Jones Industrials 12951.78 S&P 500 1407.05 Dec. DJIA Future 12978.00 +0.3% Dec. S&P 500 Future 1409.50 +0.3% Level In Late New York Trading (Previous Session) EUR/USD 1.3092 1.3094 USD/JPY 82.23 81.90 GBP/USD 1.6100 1.6099 Change From Previous Close Dec. German Bund Future 142.95 +0.21 March gilts 118.93 -0.09 Jan. Nymex Crude Oil 88.78 +0.25 Jan. Brent Crude Oil 110.12 +0.28 Gold 1703.20 +7.10 Write to Michele Maatouk at michele.maatouk@dowjones.com

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