World Stocks Modestly Lower as Dollar Rallies

World stocks fell Tuesday as soft U.S. industrial production data and disappointing comments from retailers Target Corp. and Home Depot Inc. reined in some of the optimism that had sent many indexes to 13-month highs.

The dollar, however, was rallying after the heads of both the U.S. Federal Reserve and the European Central Bank seemingly went out of their way to talk the currency up.

In Europe, the FTSE 100 benchmark of leading British shares closed down 36.74 points, or 0.7 percent, at 5,345.93 — on Monday it closed at its highest since September 2008.

Germany's DAX fell 26.39 points, or 0.5 percent, to 5,778.43 while the CAC-40 in France was 34.10 points, or 0.9 percent, lower at 3,829.06. Both indexes are near yearly highs as well.

On Wall Street, the Dow Jones industrial average was down 15.42 points, or 0.2 percent, at 10,391.54 around midday New York time while the broader Standard & Poor's 500 index fell 4.38 points, or 0.4 percent, at 1,104.92. On Monday, both U.S. indexes struck fresh 13-month highs.

Shares drifted lower throughout the day Tuesday and a raft of earnings and economic data out of the U.S. did little to alter sentiment, especially after the cautious comments from Home Depot and Target and a modest 0.1 percent gain in U.S. industrial production in October.

"Following the strong gains seen on Monday, a little bit of weakness does not come as a surprise," said David Jones, chief market strategist at IG Index.

Jones said Tuesday's selling was unlikely to be the start of a new trend downwards and stocks would likely be supported by Monday's rally.

"It does seem to have given investors and traders alike renewed confidence that this eight month recovery is not yet over and it would not be surprising to see strength return as the week rolls on," said Jones.

Stock markets have rallied strongly since March's lows as investors reined in their economic doomsday expectations to factor in a swifter than anticipated global economic rebound.