Global stock market rally falters

A global stock market rally faltered on Tuesday as European stocks fell on profit-taking, despite Tokyo striking a 10-month high on global economic optimism and company earnings news.

Japanese shares gained 0.22 percent to reach the multi-month pinnacle after Wall Street had also soared to a 2009 record on a wave of investor enthusiasm over the global economic outlook.

But Europe's main equity markets fell into the red in Tuesday morning deals after striking their highest points so far this year on Monday.

"There has been some profit-taking, but the main trend is still positive so this could be the market taking a breather," said ETX Capital trader Manoj Ladwa.

Frankfurt sank 0.86 percent, London dropped 0.78 percent and Paris dived 0.69 percent. All three had each gained about 1.5 percent in value the previous day on a wave of investor enthusiasm.

"Continued talk of economic recovery and the plethora of better than expected economic readings are showing that at worst we are nearing the bottom of this recession," added CMC Markets analyst James Hughes.

"Many are of the opinion that the turnaround is well underway and one thing that will show us that will be the (US) jobs report on Friday."

In Europe on Tuesday, the banking sector dominated the agenda once again, with results from French bank BNP Paribas and British-based emerging markets group Standard Chartered -- and divestment news from Royal Bank of Scotland.

In Paris, BNP Paribas shares slid 0.11 percent to 52.47 euros despite news of a 6.6-percent rise in second-quarter net profit to 1.604 billion euros (2.3 billion dollars).

The performance was boosted by market activities and a contribution from the recently-acquired Fortis bank.

In London, Standard Chartered shares sank 4.31 percent to 1,374 pence after it posted record first-half profits, but said it would issue new shares to raise 1.0 billion pounds (1.17 billion euros, 1.69 billion dollars).

Pre-tax profits surged 9.7 percent to a record 2.838 billion dollars in the six months to the end of June, compared with 2.586 billion in the same part of last year.

And Royal Bank of Scotland saw its shares gain 1.35 percent to 47.04 pence after it entered a deal to sell part of its banking operations in Asia to the Australia and New Zealand Banking Group for 418 million dollars (294 million euros).

RBS said in a statement that the sale to ANZ involved its retail and commercial banking operations in Taiwan, Hong Kong, Singapore and Indonesia.

The deal also includes its onshore global banking and markets and global transaction services operations in the Philippines, Vietnam and Taiwan.

Back in Japan on Tuesday, Tokyo's benchmark Nikkei-225 index gained 0.22 percent to hit 10,375.01 -- which was the best finish since October 6.

The broader Topix index of all first section shares added 1.46 points, or 0.15 percent, to 959.02, rising for a 13th straight trading day and extending the longest unbroken winning streak in more than 21 years.

Analysts said, however, that the market appeared to be losing some of its upward momentum.

Hong Kong share prices closed flat on Tuesday, as investors struggled for direction.

Wall Street had rallied Monday to lift the main stock indexes to fresh highs for the year as the positive mood was also boosted by encouraging data on the manufacturing sector.

New York's Standard & Poor's 500 broad-market index surged above 1,000 for the first time since November 4 and the Nasdaq composite leapt past 2,000 for the first since October 1.