European stock markets closed lower, with London's benchmark FTSE 100 index sliding 0.10 percent to 5,899.87 points.
In Frankfurt, the DAX 30 dipped by 0.15 percent to 6,728.19 points and in Paris the CAC 40 fell 0.26 percent to 3,375.64 points.
The Standard & Poor’s 500 fell 5 points to 1,347. The Nasdaq fell 13 points to 2,918.
The declines were broad. Seven of the 10 industry categories in the S&P 500 fell, led by financial companies and materials companies.
A modest gain in retail sales last month didn’t get investors in a buying mood.
The Commerce Department reported that US retail sales edged up 0.4 percent last month, less than the 0.7 percent growth analysts had predicted.
Despite Tuesday’s losses, stocks are still up for the year, rising slowly but steadily after a flattish 2011.
The S&P 500 is up 7.1 percent so far in 2012.
Ben Schwartz, chief market strategist at Lightspeed Financial in Chicago, thinks the US stock market will continue to inch forward, not because investors are overly optimistic about US companies but because they have more faith in them than in European governments. “We’re the best house in a bad neighborhood,” Schwartz said.
Even investors that don’t have direct investments in Europe can be affected psychologically by the cascade of contradictory and incremental news about the deal making over Greece’s debts.
“Every week it’s, ‘The sky is falling,’ then, ‘No, it’s not.’ ‘There’s rioting in the street,’ then it’s over. ‘There’s going to be a deal Friday,’ then, ‘No, it’s not Friday, it’s Wednesday,’” Schwartz said. “We really don’t know what’s underneath the covers over there.”
Greece is still locked in a drawn-out battle over how to cut spending and restart growth. The debt-laden country has signed off on incremental agreements to rein in government spending, including the passage of spending cuts over the weekend despite widespread protests from citizens.
Greece’s lenders are demanding the spending cuts before they agree to a financial support package that should keep Greece from defaulting on debts due next month. The lenders want Greece to cut pharmaceutical spending, pensions and other services that its citizens have grown to expect.
The debt talks have been contentious at times, and the lenders — including the International Monetary Fund, the European Union and the European Central Bank — have even raised questions about whether Greece actually prefers to default on its loans rather than cut its generous government spending. Critics on the other side counter that forcing Greece to cut spending will only further quash its attempts to jumpstart its economy.
A slew of downbeat economic news from Europe reinforced that danger. Greece said its economy shrank 7 percent in the fourth quarter, Europe’s statistics office is expected to report Wednesday that the euro zone’s economy shrank 0.4 percent in the fourth quarter, after growing 0.1 percent the previous quarter.
Late Monday Moody’s downgraded its debt ratings on six European countries, including Italy, Portugal and Spain. Moody’s also said it might cut France, Austria and the UK as well.
