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World stocks flat as Spain comes back into focus

A narrow victory by Greek conservatives, who favor upholding an austerity program that their country entered into for an international bailout, initially relaxed fears of a chaotic exit by Greece from the euro.

But now the focus is back on Spain, whose borrowing costs surged Monday above the 7 percent level that had forced Greece, Portugal and Ireland to seek international help.

The rate reflects what return investors are willing to accept when a country auctions its bonds. Spain’s high bond yields are a sign that investors are increasingly concerned that the country will struggle to save its crippled banks.

European stocks posted limited gains in early trading. Britain’s FTSE 100 rose 0.7 percent to 5,529.29 while and Germany’s DAX added 0.3 percent to 6,268.27. Franc’s CAC-40 fell 0.1 percent to 3,062.22.

US futures were nearly unchanged, suggesting an lackluster opening on Wall Street. Dow Jones industrial futures rose less than 0.1 percent to 12,695 while S&P 500 futures were marginally higher at 1,341.50.

“I think investors are caught between influences of being concerned with what’s going on with Spain but not willing to sell too aggressively or get out of risk positions,” said Ric Spooner, chief market analyst at CMC Markets in Sydney.

Asian stocks were sluggish. Japan’s Nikkei 225 index fell 0.8 percent to close at 8,655.87. Hong Kong’s Hang Seng fell slightly to 19,416.67 and Australia’s S&P/ASX 500 lost 0.3 percent to 4,123.30.

South Korea’s Kospi was 0.3 percent down at 1,886.96. Benchmarks in mainland China and Taiwan fell. But those in India, Singapore and Indonesia rose.

Investors appeared fed up with the inability of European leaders to resolve a financial crisis that has bedeviled markets for more than three years. Leaders of the major developing and advanced economies are meeting in Mexico to discuss the crisis and the sluggish global economy.

Many expect the U.S. Federal Reserve, which meets Wednesday, to extend a program in which it sells short-term bonds to buy long-term ones. The Fed could also launch a new round of bond buying aimed at lowering mortgage rates, although the impact of such a move on markets was unclear.

“Although attention may briefly turn to the Fed FOMC outcome tomorrow the lack of progress to resolve’s Europe’s crisis threatens to inflict much more severe damage onto global markets,” analysts at Credit Agricole CIB in Hong Kong wrote in a market commentary.

Among individual shares, Japanese electronics giant Sharp Corp. added 3.2 percent after announcing it might expand its smartphone partnership with Hon Hai Precision Industry Co. of Taiwan.

Benchmark oil for July delivery was down 72 cents to $82.55 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 76 cents to finish at $83.27 per barrel.

In currencies, the euro rose to $1.2605 from $1.2580 late Monday in New York. The dollar fell to 78.89 yen from 79.13 yen.