Stocks higher; investors await news on Europe

Associated Press

NEW YORK

As world leaders searched for a way out of Europe’s mounting debt crisis, U.S. investors moved to the sidelines.

The major market indexes closed modestly higher, after wavering between slight gains and losses throughout the morning. Trading volume was light, and the stock moves were small. In Europe, markets were mixed.

The Dow Jones industrial average rose 26.49 points, or 0.2 percent, to 12,127.95. It traded within a range of 75 points, one of the narrowest of the year.

Timothy McCandless, senior stock analyst at Bel Air Investment Advisors in Los Angeles, described Tuesday’s market as stuck in purgatory: The economy is not strong enough to represent a healthy recovery but not weak enough for the Federal Reserve to do more to help.

“It’s wrestling with those two sides,” McCandless said. “We’re right in between.”

Finance ministers and central bank presidents from the world’s seven wealthiest nations had an emergency conference call to discuss how Europe can heal its weakest countries without alienating the stronger ones that have to foot the bill. Leaders are worried that Spain and Cyprus, which are scrambling for money to prop up their troubled banks, soon will need to be bailed out by their richer counterparts.

“As we saw in Lehman Brothers, when fear hits the banking system, it shuts down,” said Jim Millstein, CEO of the advisory firm Millstein & Co. and a former Treasury official who oversaw the agency’s investments in AIG and other troubled financial institutions.

The call didn’t yield any concrete solutions for Europe, at least not publicly. Several investors who were unsure of what to do Tuesday said they expect more clarity — and perhaps more drama — later this month, after Greece has elections June 17 and world leaders from the nations known as the Group of 20 meet for the two days afterward.