Investors have been spooked over recent trading sessions by the declines recorded in commodity prices — not just gold — as well as a run of disappointing economic data from the U.S. and China, the world's two-largest economies.

Monday's explosions in Boston, which killed three people, provided investors a stark reminder of the threats posed by terrorists to a fragile global economic recovery.

"The Boston bombings have only added to the sense of unease amongst investors .... equity markets have slipped in the past few days on worries that the U.S. and Chinese economies have hit an air pocket of economic activity," said Neil MacKinnon, global macro strategist at VTB Capital.

In Europe, the FTSE 100 index of leading British shares was down 0.5 percent at 6,312 while Germany's DAX fell 0.4 percent to 7,6745. The CAC-40 in France was 0.5 percent lower at 3,690.

Wall Street was poised to recoup some of Monday's heavy losses with both Dow futures and the broader S&P 500 futures up 0.6 percent. How they actually open could hinge on a raft of U.S. corporate earnings and economic data that are due before the bell. Inflation and industrial production figures are likely to garner the most attention.

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Official figures Tuesday showed that unemployment across the 17 European Union countries that use the euro has struck 12 percent for the first time since the currency was launched in 1999.

Eurostat, the EU's statistics office, said the rate in February was unchanged at the record high after January's figure was revised up to 12 percent from 11.9 percent.

Spain and Greece have mass unemployment and many other countries are seeing their numbers swell to uncomfortably high levels as governments across the region enact tough austerity measures to get a handle on their debts.

The eurozone, which is made up of a little more than 330 million people, is one of the world's major economic pillars and the turmoil surrounding it has been one of the main reasons why the global recovery has been muted.

A total of 19.07 million people were officially out of work in the eurozone in February, nearly two million more than the same month the year before. For the 27-country European Union, of which the eurozone is a large part, the unemployment rate was 10.9 percent.

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Congress has to increase the country's debt limit, which effectively rules how much debt the U.S. can have, by March 1 or face a potential default. There are fears that the debate will descend into the sort of squabbling and political brinkmanship that marked the last effort to raise the ceiling in the summer of 2011. The U.S. Treasury Department warned then that it had nearly reached a point where it would be unable "to meet our commitments securely."

Standard & Poor's was so concerned by the dysfunctional nature of the 2011 debate that it stripped the U.S. of its triple A rating for the first time in the country's history.

"The pressure on the U.S. rating, if anything, is increasing," said David Riley, managing director of Fitch Ratings' global sovereigns division. "We thought the 2011 crisis was a one-off event .... if we have a repeat we will place the U.S. rating under review."

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The rate reported by Eurostat, the EU's statistics office, was up from an upwardly revised 11.5 percent in August. In total, 18.49 million people were out of work in the eurozone in September, up 146,000 on the previous month, the biggest increase in three months.

While the eurozone's unemployment rate has been rising steadily for the past year as the economy struggled with a financial crisis and government spending cuts, the United States has seen its equivalent rate fall to 7.8 percent. The latest U.S. figures are due Friday.

With the eurozone economy fading, most economists think unemployment will keep increasing over the coming months and that the deteriorating economic picture will soon spook investors again after a brief hiatus.

"Financial markets have calmed somewhat, but we expect that the deteriorating economy will soon enough lead to more crisis headlines," said Tim Ohlenburg, senior economist at the Centre for Economics and Business Research.

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The British tycoon behind the Virgin business empire that spans cable television, airlines and space tourism revealed that the three will make the journey 62-miles (100 kilometers) above the Earth aboard the SpaceshipTwo (SS2) next year. Some 120 other tourists who have signed up for the $200,000 two-hour trips into space over the coming years were also present at the Farnborough Airshow south of London.

"Next year, Holly and Sam will be joining me for a first voyage into space," the thrill-seeker told a packed conference on the third day of the show. "Going into space is a hard business. It keeps my mind buzzing."

Virgin says it has 529 paid up passengers already — one more than the total of space travelers since the former Soviet Union's Yuri Gagarin became the first man to go into space in 1961.

The future space tourists glimpsed a replica of the SS2 set up outside the auditorium as the actual one undergoes flight testing in California's Mojave Desert. It will take off from a spaceport in New Mexico that was designed by British architect Lord Foster. The craft is designed to seat six people as well as the two pilots.

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The Fed's surprise announcement Tuesday that it would likely keep its Fed funds rate at near zero percent through 2013 to help the ailing U.S. economy fueled a late Wall Street surge -- the Dow Jones industrial average rallied 6 percent just in the final hour of trading, one of the biggest turnarounds ever seen.

That continued into Asian and European trading sessions Wednesday, although traders remained nervous after the market turmoil of recent weeks, which has sent many global markets officially into bear market territory -- falling 20 percent from recent peaks. That nervousness became more acute as the U.S. open loomed and European markets gave up all their earlier gains.

"So far, panic has eased but fear remains," said Kit Juckes, an analyst at Societe Generale.

In Europe, the FTSE 100 index of leading British shares was down 1.4 percent at 5,093 while Germany's DAX fell 2.5 percent to 5,814. The CAC-40 in France was 2.5 percent lower at 3,098.

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European markets shed their early momentum and losses were heavy in Asia. Most stocks were trading sharply lower amid mounting fears over the opening of U.S. markets, when traders will have their first chance to respond to Standard & Poor's momentous decision to lower its triple A rating for the U.S.

"The reverberations from S&P's downgrade are still being felt across the globe," said David Jones, chief market strategist at IG Index.

For a brief while Monday, it seemed that the risky decision by the European Central Bank to buy the bonds of Italy and Spain in order to help them pay their way had helped ease the selling pressure, at least in Europe, but that soon changed.

Monday's trading came after one of the worst market weeks since the collapse of U.S. investment bank Lehman Brothers in 2008 -- around $2.5 trillion was wiped off global stocks last week.

In Europe, Britain's FTSE 100 index of leading British shares was down 1.7 percent at 5,157 while France's CAC-40 fell 1.6 percent to 3,227. Germany's DAX was 2.3 percent lower at 6,091.

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Developments elsewhere were more muted -- an indication that investors think the costs facing Japan may not spill over significantly. In Europe, sentiment was partly supported by the weekend agreement of a broad package of measures to ease the government debt crisis that has already forced Greece and Ireland into seeking bailouts.

However, most attention was centered on Japan, and how the world's third-largest economy is dealing with the catastrophic events of last Friday. Financially, the situation is made even more difficult by the fact that Japan's debt stands at around 200 percent of its national income and its economic recovery came to a grinding halt in the last three months of 2010.

The Bank of Japan was quick off the mark Monday, injecting a record 15 trillion yen ($183.8 billion) into money markets to try to defend the already fragile economy. By flooding the banking system with cash, the central bank hopes banks will continue lending money and meet the likely surge in demand for post-earthquake funds.

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Libya once again was at the forefront of investors' minds as governments around the world piled pressure on longtime leader Moammar Gadhafi to step aside in the wake of the uprising that has split the country in two and left hundreds of people dead.

The primary market impact of the violence in the OPEC country has been on oil prices, which shot higher over the past couple of weeks as investors fretted over Libya's supplies and whether the violence in the Arab world will spread, in particular to Saudi Arabia. Already this year, the leaders of Tunisia and Egypt have quit following huge demonstrations.

The sharp rise in energy prices has had a knock-on effect on shares as concerns grow over the global economic recovery.

At current levels, oil prices have the potential to choke off growth as well as increasing inflationary pressures. If they were to rise to $200 a barrel, which many analysts think is possible in the event of contagion into the Gulf, then the dreaded double-dip recession could well materialize. Rising tensions in Saudi Arabia's oil-rich neighbor Oman are keeping those concerns alive.

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In Europe, the FTSE 100 index of leading British shares was up 56.49 points, or 1.1 percent, at 5,427.53 while Germany's DAX rose 88.86 points, or 1.5 percent, at 6,172.71. The CAC-40 in France was 54.96 points, or 1.5 percent, higher at 3,686.39.

Wall Street was poised for a solid opening too -- Dow futures were up 101 points, or 1 percent, at 10,410 while the broader Standard & Poor's 500 futures rose 10.9 points, or 1 percent, at 1,100.50.

Sentiment in the markets was buoyed by the news that the U.S. economy shed fewer jobs than anticipated during August and that private payrolls actually increased more than expected.

Though the Labor Department reported that 54,000 nonfarm payrolls were lost during August, that was much less than the 110,000 consensus in the markets and was mainly due to the axing of one-off census jobs. When government jobs are stripped out, employers added 67,000, double market expectations.

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In Europe, the FTSE 100 index of leading British shares was down 17.54 points, or 0.3 percent, at 5,348.24 while Germany's DAX fell 32.79 points, or 0.5 percent, to 6,300.79. The CAC-40 in France was 24.25 points, or 0.6 percent, lower at 3,739.94.

Wall Street was also expected to open lower -- Dow futures were down 52 points, or 0.5 percent, at 10,583 while the broader Standard & Poor's 500 futures fell 6.8 points, or 0.6 percent, to 1,116.70.

European stocks and Wall Street futures had been trading higher before figures from the Labor Department accentuated fears that the U.S. economic recovery is slowing down faster than expected.

It revealed that U.S. employers, both public and private, shed 131,000 jobs during July, double market expectations and that June's 221,000 decline in payrolls was greater than initially thought. Both months have been impacted by jobs losses related to the census -- there were 148,000 census-related layoffs in July.

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In Europe, the FTSE 100 index of leading British shares was down 48.07 points, or 0.9 percent, at 5,222.95 while Germany's DAX fell 23.68 points, or 0.4 percent, to 6,167.45. The CAC-40 in France was 32.47 points, or 0.9 percent, lower at 3,605.29.

On Wall Street, the Dow Jones industrial average was down 32.25 points, or 0.3 percent, at 10,330.77 soon after the open while the broader Standard & Poor's 500 index fell 4.57 points, or 0.4 percent, at 1,090.77.

U.S. stocks had earlier been expected to open solidly higher before the Commerce Department reported that U.S. retail sales fell by a greater than anticipated 0.5 percent in June. That followed a 1.1 percent fall in May and provided further evidence that the recovery in the U.S. is stuttering. Excluding autos, spending was down 0.1 percent in June.

"June's retail sales figures add to the growing batch of evidence suggesting that the economic recovery shifted into a lower gear towards the end of the second quarter," said Paul Dales, U.S. economist at Capital Economics.

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By early afternoon, London time, the euro was trading 0.3 percent lower on the day at $1.2320 as finance ministers from the EU gather in Brussels to try to restore confidence and ward off a full-fledged financial meltdown.

Earlier the 16-country euro had fallen to $1.2237 -- its lowest since April 2006 -- meaning it had fallen nearly 10 cents in the space of a week.

The shared currency has now fallen a staggering 12 percent over the past week in spite of the massive euro750 billion 'shock and awe' financial rescue package unveiled last weekend from the EU, together with the International Monetary Fund.

The slide comes as Europe's leaders are saying that the loan backstop isn't enough and that goverments must take drastic steps to get debt under control -- and shore up the fundamental rules that govern their 11-year-old currency.

German Chancellor Angela Merkel conceded over the weekend that package was no more than a band-aid solution to the problems afflicting a number of eurozone countries, from Ireland all the way across to Greece.

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While stocks bounced back from one of the worst weeks since the height of the financial crisis in 2008, the euro also rebounded -- to above $1.30 at one stage before settling around $1.2925. Last week it had slid to a 14-month low of $1.2569.

"Default risk has been quashed and the market reaction has been euphoric," said Jane Foley, research director at Forex.com.

In Britain, investors put aside any concerns about last week's inconclusive election, from which a government has yet to be formed, and sent the FTSE 100 index of leading shares up 240.98 points, or 4.7 percent, higher at 5,364.

In Germany, uncertainty related to defeat in a regional election for Chancellor Angela Merkel were similarly downplayed -- the DAX index spiked 267.85 points, or 4.7 percent, higher at 5,982.94.

France's CAC-40 was the best-performing major index in Europe, surging 280.94 points, or 8.3 percent, to 3,673.53.

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In Europe, the FTSE 100 index of leading British shares was up 64.80 points, or 1.3 percent, to 5,210.54, while Germany's DAX rose 85.58 points, or 1.5 percent, to 5,625.91. The CAC-40 in France was 42.12 points, or 1.1 percent, at 3,730.9.

Wall Street was also poised to join in the rally -- Dow futures were up 50 points, or 0.5 percent, at 10,112 while the broader Standard & Poor's 500 futures rose 5.7 points, or 0.5 percent, to 1,084.90.

The bulk of the gains came after the Commerce Department reported that the U.S. economy grew by an annualized rate of 5.7 percent in the fourth quarter, a full percentage point higher than expected.

As expected, the main impetus behind the growth was a rebuilding of inventory levels in the wake of the recession's end, though consumer spending and exports were strong too.

Neil Mackinnon, global macro strategist at VTB Capital, said the markets are fully aware that much of the improvement was due to inventories, but that the data may ease concerns of a possible double-dip recession in the U.S.

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