Europe markets mixed after Asian losses

CNN) -- European markets edged towards positive territory in afternoon trading after spending most of the morning weighed down by losses on Asian markets and recession fears.

Asian markets suffered losses on recession fears.

Major indexes across the continent shook off early declines with London's FTSE leading the modest rally, up 0.46 percent at 4,266 points. Paris' Cac was also narrowly ahead, up 0.28 percent at 3,346 but Frankfurt's DAX slipped back into the red, down 0.3 percent at 4,747.

In Asia, Japan's Nikkei index finished down 1.3 percent, while the KOSPI in Seoul was off less than half a percent.

Australia's All Ordinaries index slipped a full percent. In Hong Kong, the Hang Seng shed about six-tenths of a percent.

On Wall Street, recession fears trumped a new government and mortgage industry plan to help troubled homeowners.

The Bush administration's mortgage modification plan focuses on Fannie Mae and Freddie Mac -- which own or back a combined $5 trillion in mortgages. However, the plan does not provide any direct financial help from the U.S. government.

The Dow Jones industrial average lost 176 points, or 2 percent, after being down as much as 310 points earlier and recovering to within a few points of the break-even line. The Standard & Poor's 500 index and the Nasdaq composite both shed 2.2 percent. Click here for a summary of the global markets »

GM and Ford Motor continued to slide on worries that the companies won't be able to stay afloat without government intervention.

General Motors plunged to a 65-year low after it said it will idle an additional 1,900 jobs on top of those already announced. On Friday, GM posted a steep loss and said it is running out of cash. Ford Motor shares slumped too.

Both companies, along with Chrysler are seeking help from the U.S. government. On Tuesday, President-elect Obama told President Bush that the automakers need more federal help, according to his aides.

"Between the automakers and the financials, bad news continues to dominate," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.

Late Monday, Starbucks reported weaker earnings and higher revenue, both of which missed estimates. Shares declined modestly Tuesday.

Despite all the bad economic news, U.S. futures, which offer an indication of how markets may open when trading begins in New York on Wednesday, were higher.