World markets moody as Dow falls short of 17,000

London • The failure of the main U.S. indexes to break through key thresholds and financial jitters in Europe weighed on markets Thursday as investors grew skeptical over the near-term outlook for stocks.

On Wednesday, stocks, particularly in the U.S., were buoyed by minutes to the last meeting of the Federal Reserve that suggested interest rates will likely stay near zero for a while, even after monetary stimulus has been removed.

"The inability for the Dow to hold above 17,000 on Wednesday or the S&P to break through 2,000 may be seen as a red flag among investors that we're not yet ready for that next leg higher and as a result, we're going to see profit taking near these levels for now," said Craig Erlam, market analyst at Alpari.

In Europe, sentiment took a hit after worries over the health of one of Portugal's largest financial groups slammed the country's stock market and pushed up its borrowing rates. The tensions are centered on the Espirito Santo group of companies, which includes Portugal's largest bank Banco Espirito Santo.

Share trading in the bank was suspended after a precipitous fall of more than 16 percent, dragging the Lisbon stock exchange down more than 4 percent and pushing up the yield on Portugal's benchmark 10-year bonds by 0.13 percentage points to 3.89 percent.

The FTSE 100 index of leading British shares was down 1 percent at 6,654. Germany's DAX was 1.7 percent lower at 9,638 while the CAC-40 fell the same rate to 4,285.

Wall Street was poised for losses at the open with Dow futures and the broader S&P 500 futures 1 percent lower.

Earlier, in Asia, stocks closed mostly higher after China reported a small acceleration in export growth. China's June exports rose 7.2 percent in dollar terms from a year earlier, accelerating slightly from May's 7 percent growth, according to China's customs office. The growth was a small sign of improvement for the world's No. 2 economy. There were still concerns about China's uneven recovery as imports remained lackluster in a sign of weak domestic demand.

"There's a bit of optimism with China's customs office expecting exports growth to accelerate in the third quarter. Imports could also pick up based on improving signs of manufacturing and services activity in the past two months," Ryan Huang, a market strategist at IG, said in a commentary.

South Korea's Kospi added 0.1 percent to 2,002.84 even after the central bank lowered this year's growth outlook. Hong Kong's Hang Seng rose 0.3 percent to 23,238.99 and China's Shanghai Composite was steady at 2,038.34. Stocks in Australia, Singapore and Thailand also gained ground.