While you were sleeping: Wall Street, FedEx slide

BUSINESSDESK: Wall Street moved lower as a profit warning by FedEx underpinned the ongoing uncertainty about the flagging economy both at home and abroad, bolstering the appeal of US Treasuries.

Shares of FedEx dropped 2.7% after the company lowered its profit forecast for its fiscal year 2013, saying customers were opting for cheaper shipping alternatives in a bid to cut costs.

In late afternoon trading in New York, the Dow Jones Industrial Average slipped 0.06%, the Standard & Poor's 500 lost 0.22%, while the Nasdaq Composite Index fell 0.16%. In contrast, US Treasuries rose, pushing 10-year yields five basis points lower to 1.79%.

While policymakers in the US and Europe have pledged their support through asset purchases in the past couple of weeks, investors are reassessing valuations after the recent surge in prices.

"The market got a little bit ahead of itself with the one-two punch from the ECB and the Fed in the last two weeks," Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon, told Bloomberg News.

"It really hasn't changed the fundamental outlook for recession in Europe and weak growth in the US."

In Europe, Spain managed to sell 4.6 billion euros of bills, attracting decent demand after the European Central Bank earlier this month offered unlimited support to help keep borrowing costs down for struggling eurozone members.

"The auction was reasonable and gives some confidence Spain can keep going for a while longer," Elisabeth Afseth, a fixed-income analyst at Investec Bank in London, told Bloomberg.

"It shows the ECB have bought them some time and that's what's taken a little bit of the pressure off them today. However, they will probably still need a bailout at some stage."

Investors remain concerned about the region's debt problems, and for good reasons.

"You are looking at a Spanish economy that has 25% unemployment and a huge overhang of residential mortgages. Even if you write a lot of those down, you are still talking about fiscal austerity, so you can't grow your way out of arguably a recession," Lane Newman, director of foreign exchange trading at ING Capital Markets in New York, told Reuters.

A report showing German investor confidence improved for the first time in five months failed to inspire. The ZEW Centre for European Economic Research in Mannheim says its index of investor and analyst expectations rose to minus 18.2 in September from minus 25.5 in August.

Europe's Stoxx 600 Index finished the session with a 0.4% decline on the previous close. National benchmark stock indexes in Germany, France and the UK all dropped. The euro also fell, weakening 0.6% to $US1.3038.