By Nina Bains and Michele Maatouk European stocks were mostly lower Tuesday as global growth fears outweighed hopes that China will introduce further stimulus measures, while the euro weakened against the dollar as discord between Greece's creditors held back any real progress on the country's debt crisis. By mid-morning, the benchmark Stoxx 600 index lost 0.1% to 271.22. The U.K.'s FTSE 100 index shed 0.2% at 5829.70, Germany's DAX was 0.5% lower at 7257.01 and France's CAC-40 added just 0.1% at 3410.15. Positive sentiment following China's move overnight to inject liquidity into its economy was short-lived. The People's Bank of China made its second biggest daily fund injection into the money market, introducing 265 billion yuan ($41.9 billion) to try to ease monetary conditions and boost the slowing economy. Stocks remained down, failing to hold on to early gains as worries about global growth prospects and uncertainty about Spain undermined sentiment. In its latest World Economic Outlook, the International Monetary Fund said risks of a serious global slowdown were "alarmingly high," in what turned out to be its bleakest assessment of global growth prospects since the recession of 2009. The IMF forecast that the world economy will expand 3.3% this year, down from the 3.5% it estimated in July. Global economic growth is predicted to accelerate to 3.6% in 2013, compared with an initial forecast of 3.9%. Meanwhile, Monday's Eurogroup meeting failed to yield any meaningful developments, although the euro zone's new bailout fund, the European Stability Mechanism, came into operation and Klaus Regling was confirmed as managing director. Still, uncertainty remains over when or even if Spain will ask for a bailout, particularly after German Finance Minister Wolfgang Schaeuble insisted Monday that Spain doesn't need an assistance program. Spain's 10-year government bond yield was only 0.04 percentage points higher at 5.73%, while the corresponding yield on Italy's bond was little changed at 5.07%, according to Tradeweb. A meeting of European Union finance ministers starts later Tuesday, while German Chancellor Angela Merkel will be in Athens, where Greece's creditors are said to still be at loggerheads over how to tackle the country's debt crisis, with the IMF threatening to stop its financing, people with direct knowledge of the matter said. This lack of progress weighed on the euro, which was fetching $1.2937 from $1.2968 late Monday in New York, having slumped to $1.2907 earlier in the session. The dollar was at Y78.30 from Y78.32. Adding pressure on euro-zone officials to act on the situation in Greece was a warning from the IMF that government debt in the region is accumulating much faster than expected, something that could potentially hamper ambitious deficit reduction targets there. Despite this, Greece's ASE Composite index rose 0.9% to 832.61. Italy's FTSE Mib sank 0.1% at 15577.00 and Spain's IBEX-35 lost 0.8% at 7824.60. The growth outlook in the U.K. appeared more dire following a spate of data releases, compounding worries after the IMF warned that the U.K. economy will contract this year and grow more slowly than previously forecast next year. Industrial production in the U.K. fell 0.5% in August from the previous month and dropped 1.1% on annual basis, both in line with views. Meanwhile, manufacturing output fell 1.1% on the month and 1.2% on the year. "The month-on-month drop in manufacturing output in August is disappointing and latest survey evidence also points to a struggling sector," said Dr Howard Archer, Chief European and UK Economist at IHS Global Insight. "In particular, the manufacturing purchasing managers' survey for September pointed to a contraction in output across the consumer, intermediate and investment goods sectors," he added. Separately, the U.K.'s goods trade deficit widened, reflecting a fall in exports and a rise in imports. December gilts were little moved on the data, down eight ticks at 120.23, while sterling was steady at $1.6011 from $1.6026. Also Tuesday, bellwether Alcoa kicks off the third-quarter earnings season in the U.S. Figures will be closely watched as some market participants have argued that weak global growth will affect the corporate earnings picture. Ahead of the open, the Dow Jones Industrial Average front month futures contract shed 0.1% at 13,494.00, the S&P 500 front month futures contract was also 0.1% lower at 1448.80. November Nymex crude oil futures were up $0.50 at $89.83 a barrel and the December Brent oil contract rose $0.58 at $111.50. Spot gold was down $0.60 at $1,773.90 a troy ounce. The December Bund contract was down 20 ticks at 141.19. Write to Nina Bains at nina.bains@dowjones.com and Michele Maatouk at michele.maatouk@dowjones.com

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