Europe's debt problem remains a concern as WSJ reports growing doubts about its rescue plan.
Doubts grew about the effectiveness of a key proposal for stemming Europe's deepening debt crisis as it emerged that officials have ruled out a plan for the euro-zone's bailout fund to directly guarantee bond issues.
Instead, European officials are discussing a scenario in which governments issuing bonds would borrow from the bailout fund to guarantee a portion of the bond issues—a move that would increase debts for already troubled economies.
Meanwhile, the rating downgrades in Europe continue. Slovenia is the latest target of sovereign downgrades, its long- and short- term credit ratings being cut by Standard & Poor’s to AA-/A-1+ from AA/A-1+ on Wednesday.
On the same day, Moody's Investor Service cut the ratings of five Spanish banks and several regional governments, saying its two-notch downgrade of Spain on Tuesday lessens the potential level of support their national government could provide.
Economic reports on Wednesday were mixed.
Japan reported that its all industry activity index fell 0.5 percent in August, its first contraction since March.
In the US, the Federal Reserve reported that economic activity continued to expand in September. However, the Fed also noted that many Districts described the pace of growth as "modest" or "slight".
There was nothing modest or slight about the improvement in housing in September though. Housing starts jumped 15 percent to an annual rate of 658,000 units last month, the fastest pace in 17 months.
However, consumer prices were also up last month, rising by 0.3 percent over the previous month and pushing the 12-month increase to a three-year high of 3.9 percent.
But inflation is no longer the main concern of policy-makers. Wednesday saw Brazil's central bank easing monetary policy for the second consecutive meeting, the Selic rate being cut to 11.5 percent from 12 percent, even though inflation had hit a six-year high of 7.31 percent in September.
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