European stock markets turned lower Wednesday as worries about Eastern Europe weighed on investors in Germany and Wall Street opened sharply lower amid further grim U.S. housing news. On Wall Street, the Dow Jones industrial average slid 133.02 points, or 1.8 percent, to 7,217.92, while the broader Standard & Poor's 500 index fell 15.16 points, or 2 percent, to 757.98. Those early losses in the U.S. pushed Europe's indexes lower for the fourth day running. The FTSE 100 index of leading British shares was up 38.04 points, or 1 percent, at 3,854.48, while France's CAC-40 rose 23.51 points, or 0.9 percent, at 2,731.56. Germany's DAX was suffering the most, down 86.73 points, or 2.2 percent, at 3,809.02 as yet another East European country saw its sovereign debt rating downgraded. Standard and Poor's said it had slashed Ukraine's long- and short-term foreign currency sovereign credit ratings to CCC+/C, seven notches below investment grade, because of its precarious fiscal and economic situation. The Ukraine downgrade follows Tuesday's decision by S&P to cut its rating on Latvia to junk status. Investors are increasingly worried that Germany, as the European Union's economic powerhouse, may have to directly intervene to bail out the troubled economies of Eastern Europe as well as possibly helping the peripheral countries in the EU, such as Ireland and Greece, while dealing with its own deep recession. «The market is saying it is worrying about the fiscal pressures on Germany, the key European nation, if it has to become the lender of first resort,» said Neil Mackinnon, chief economist at ECU Group. The sharp sell-off at the Wall Street open gathered pace after the National Association of Realtors reported an unexpected 5.3 percent drop in existing U.S. home sales in January to a 4.49 million annual rate. Economists had been expecting a modest increase during the month, which would have been the second in a row. «The drop back in the number of existing US home sales in January dashes hopes that housing activity had found a floor,» said Paul Dales, economist at Capital Economics. Earlier, Europe's markets had rallied after Federal Reserve chairman Ben Bernanke said the U.S. government had no plan to fully nationalize any of the country's distressed banks. In testimony to the Senate Banking Committee Tuesday, Bernanke said formally nationalizing the banks to ensure their viability «just isn't necessary.» Over recent days, the prospect of nationalization has weighed heavily on markets around the world because of fears it would dilute share prices and turn over major decision-making to government regulators. Bernanke will also be the focus of attention Wednesday when he addresses lawmakers in the House of Representatives and markets will be looking for any further details about what will happen with Citigroup Inc. _ widely considered the most vulnerable U.S. bank _ if nationalization is off the agenda. The current market expectation is that the U.S. government will swap its preference shares for 40 percent worth of ordinary shares in Citigroup. Asian markets mostly closed higher following Wall Street's Bernanke-fueled rally on Tuesday. The Nikkei 225 stock average jumped 192.66 points, or 2.7 percent, to 7,461.22, despite news of a record Japanese trade deficit in January as global demand for the country's export-rich products collapsed. Meanwhile the Hang Seng index in Hong Kong rose 1.6 percent to 13,005.08 even though the government predicted the local economy would shrink throughout 2009. Elsewhere in Asia, South Korea's Kospi was up 0.3 percent at 1,067.08, while Shanghai's benchmark added 0.3 percent, India's stock measure advanced 0.7 percent and Taiwan's main index was 1.4 percent higher. In currencies, the dollar rose 0.2 percent to 96.93 yen, while the euro was down 0.4 percent at $1.2785. Meanwhile, oil prices pushed back above the $40 a barrel market with light, sweet crude for April delivery up 73 cents at $40.69 on the New York Mercantile Exchange. AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.

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