(RTTNews) - The European markets surrendered some of its early gains and are trading in the red on concerns that financial companies may need more capital to stay afloat. Earlier, the markets opened higher following the Australian central bank’s move to slash its key rate by 1 full percentage point to 6%. The action increased investor expectation for a rate cut by the Bank of England, when it meets on Thursday.

Oil prices recovered and are trading above $90 after falling to multi-month lows yesterday. In European trading, the crude futures for November delivery are gaining $2.98 to $90.79.

In European trading, the euro is remaining volatile against the U.S. dollar and the Japanese yen. Currently, the euro-dollar pair is worth 1.3552 and the euro-yen pair is trading at 137.82. Meanwhile, the euro is gaining against the British pound and the pair is currently worth 0.7797.

On Monday, the Dow, the Nasdaq, and the S&P 500 set four-year closing lows. The Dow closed down 370 points or 3.6% at 9,955, the Nasdaq shed 83 points or 4.3% to 1,864, and the S&P 500 fell 42 points or 3.9% to 1,056.89.

In the Asia-Pacific region Tuesday, the markets ended mixed. Japan’s Nikkei closed down 3.03% and China’s Shanghai Composite index gave away 0.73%. However, Australia’s All Ordinaries indexes closed up 1.17% and South Korea’s KOSPI gained 0.54%.

Among the European indices, the FTSEurofirst 300 index of pan-European blue chips is falling 1.12% to 993.60 and the narrower DJ Euro Stoxx 50 index is down 0.58% at 2.852.46.

Across Europe, the U.K’s FTSE 100 index is slipping 0.73% to 4,555.77 and Germany’s DAX 30 index is falling 0.62% to 5,353.65. However, France’s CAC 40 index is up 0.47% at 3,729.47.

Financial stocks are retreating after a short rally in early trading, helped by the Australian government’s rate cut.

Royal Bank of Scotland is plummeting over 33% after S&P cut the bank’s credit ratings and speculation emerged that it was in talks for UK government funding. Along with RBS, HBOS is falling 20.48% and Lloyds TSB Group is plunging 20.07% and Deutsche Bank is losing 14.74%.

On the other hand, shares of oil companies are gaining, helped by higher crude prices. French oil firm Total is advancing 2.11% and Royal Dutch Shell is up 1.08%.

Miners are also seeing some buying activities in their stocks on the strength back of higher metal prices. Lonmin is gaining 3.61% and BHP Billiton is rising 1.40%

On the economic front, the Office for National Statistics announced that manufacturing production in the UK declined 0.4% in August from the previous month, while economists expected just a mere 0.2% fall. Also, production was down 0.2% in July. On a yearly basis, manufacturing output dropped 1.9%, following a 1.4% fall in the prior month. Meanwhile, industrial production slid 0.6% month-on-month.

Investors also await the release of the German factory orders report. In the U.S., traders await the release of the minutes of the September 16 FOMC meeting. Traders may also pay close attention to what Fed Chairman Ben Bernanke has to say when he speaks on the economy and markets at an event in Washington, D.C.

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Posted in Categories: Australia, Eurozone, Japan, Releases, Stocks, UK, USA.

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