The major markets across Europe are set to open sharply lower on Wednesday, following the lead from Wall Street where the major indices declined for the second consecutive day on Tuesday on increasing concerns that weaker earnings for the quarter ended March may thwart hopes of an earlier-than-expected global economic recovery.

Weak economic fundamentals such as increasing unemployment, declining consumer spending and shrinking trading activities may also weigh on market sentiment.

Concerns have already been raised regarding the efficacy of the new initiatives by Fed Reserve to unclog the credit markets with Calyon Securities having initiated coverage of several banks with either Sell or Underperform ratings, citing concerns about increased loan losses and the belief that government actions might not help as much as expected.

On Tuesday, the Dow closed down 186.29 points or 2.3% at 7,790, while the Nasdaq closed down 45.10 points or 2.8% at 1,562 and the S&P 500 closed down 19.93 points or 2.4% at 816.

Alcoa, which kickstarted the earnings season in the U.S., released first quarter results after the markets closed, reporting a net loss that was worse than analysts' expectations, with the company attributing the loss to the weakness in its core industrial and commercial markets as well as the historic decline in aluminum prices.

Earlier, markets across Europe closed weaker on Tuesday after a report showed the euro-zone economy contracted more than estimated in the fourth quarter and investors became anxious over the approaching onslaught of corporate earnings

The FTSEurofirst 300 index of pan-European blue chips closed 0.70% lower at 761 points, while the narrower DJ Stoxx 50 index fell 0.49% to 1,872 points. The U.K.'s FTSE 100 index slipped 1.58% to 3,930, while France's CAC 40 index slipped 0.94% to 2,902 and Germany's DAX index fell 0.63% to 4,322.

Markets across the Asia-Pacific region are trading weaker following Wall Street losses, and the sentiment across the markets is one of anxiety and concern. Investors may look to take profits at every opportunity following the recent rally and prefer to stay on the sidelines.

On the economic front, the National Institute of Economic and Social Research in the U.K. said today that the U.K. economy might have slid 1.5% during the first three months of 2009, following a drop of 1.6% in the last three months of 2008. In a separate report, the Nationwide Building Society said that the consumer confidence index for March dropped to 41 during March from 43 recorded in February.

Provisional data released by the Federal Statistical Office in Germany revealed that the trade balance for February 2009 was a surplus of EUR8.7 billion compared to a surplus of EUR17.1 billion in February 2008. Exports declined 23.1% year-over-year, while imports were 16.4% lower than the same period last year. In comparison to January 2009, exports shrunk 0.7% while imports were down by 4.2%.

Among corporate news, Pernod Ricard (PRN.L, PDRDF.PK) said it has signed a definitive agreement to sell its Wild Turkey American straight bourbon and related businesses to Gruppo Campari for a total purchase price of US$ 575 million to be paid in cash. The transaction is expected to close in the second quarter.

Autonomy Corp. Plc (AU.L) said it has secured a multi-million dollar order from UK Government for Autonomy software for the management of SharePoint.

Heritage Oil Ltd. (HOIL.L) said it completed the sale of Eagle Energy (Oman) Ltd., a wholly owned subsidiary of Heritage, to RAK Petroleum Oman Ltd. for US$28 million, plus a working capital adjustment of $0.4 million. The effective date of the transaction is December 31, 2008.

Rolls-Royce Group plc (RR.L, RYCE.PK) said it has won order worth up to US$900 million at list prices, to power Saudi Arabian Airlines aircraft. The contract will include a long-term service agreement.

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