Frankfurt (Reuters) - Ongoing concerns about the global economy made investors on the stock markets cautious on Tuesday.

Germany's leading index, the Dax, pared back its initial gains in the morning and was down slightly at 15,792 points. Its European counterpart, the EuroStoxx50, remained virtually unchanged at 4279 points. In the USA, however, the expectation of important economic figures pushed the stock markets slightly higher as the day progressed. Futures for the most important Wall Street indices were up slightly.

A speech by ECB head Christine Lagarde at the annual monetary policy forum in Sintra, Portugal, put Europe in a bad mood. According to Lagarde, the European Central Bank (ECB) will not abandon its tightening course for the time being in view of the continuing high inflation. It is also unlikely that the monetary authorities will be able to declare with absolute conviction in the near future that key interest rates have peaked.

The interest rate worries are fueling new fears of recession, said portfolio manager Hani Redha from asset manager PineBridge. "Economic data will continue to deteriorate as monetary policy is tightened, and temporary tailwinds such as the easing energy crisis and China's recovery after the coronavirus crisis are likely to have only a short-term effect on the market."

More and more bond investors are betting on a profound economic slowdown. The much-noticed yield gap - known as the spread in technical jargon - between two-year and ten-year German government bonds rose to 0.844 percentage points, surpassing the 31-year high it reached on Friday. Experts refer to this as an "inverted yield curve" because shorter-dated securities usually pay lower interest than long-dated bonds due to the lower risk. Experts regard such a development as a harbinger of a recession.

Oil prices were also unable to maintain their earlier gains. Macroeconomic concerns pushed North Sea Brent crude and light US WTI crude down by around one percent each to 73.37 and 68.56 dollars (159 liters) per barrel respectively.

SIEMENS ENERGY TAKES A CAUTIOUS RECOVERY COURSE

Analysts at Goldman Sachs described the market reaction to the recent problems at Siemens Energy as "exaggerated" and thus lifted the share into positive territory. The experts recommend the shares as a "buy". The shares of the Munich-based electrical and energy technology manufacturer advanced by two percent, thereby reducing some of the losses of the past few days. The share price has plummeted by more than 30 percent since Friday. The problems with the onshore wind turbines already installed are greater than expected.

Dampened business prospects in the USA, on the other hand, weighed on the dialysis group Fresenius Medical Care. FMC shares fell by just under five percent on Tuesday morning, making it the biggest loser in the second-line index MDax. In the USA, it had previously been announced that the increase in reimbursement rates for dialysis services by the state health insurance scheme Medicare for senior citizens would probably be lower than expected.

A reduction in the production of e-cars at the Volkswagen plant in Emden weighed on the share price. The carmaker's shares lost a good two percent, bringing them to the bottom of the DAX. A Group spokesperson told Reuters that Volkswagen is "actively managing its business" and is focusing on profitability rather than volume. Earlier, the news agency dpa-AFX had reported, citing the Volkswagen works council in Emden, that the group wanted to cut production in the next two weeks because demand was lower than originally expected.

(Report by Zuzanna Szymanska, edited by Christian Rüttger. If you have any questions, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets).)