Global shares struggled to find direction Tuesday as indications Europe's economy is still in trouble competed with hopes that the U.S. central bank wasn't quite finished with its stimulus.

Industrial producer prices fell 0.3 per cent in May in the 17 European Union countries that use the euro, Eurostat reported Tuesday. While that shows costs are falling, it also indicates manufacturing activity remains weak.

A report by Reuters also indicated that time is running out for Greece, with the so-called troika of funders — the International Monetary Fund, the European Union and the European Central Bank — giving Athens a three-day deadline to assure foreign lenders it can meet its bailout terms.

Meanwhile, Spain announced Tuesday that the number of people registered as unemployed dropped for a fourth consecutive month in June — but the country has a long way to go to bring its jobless rate down to normal levels. It currently stands at 27.2 per cent.

A separate report on Monday showed the unemployment rate in the eurozone was at 12.1 per cent in May, its highest level ever.

"While the European economy appears to be starting to show flickers of recovery, particularly in Spain and Italy, where the manufacturing sector appears to be showing signs of coming off life support, the unemployment picture remains disturbingly high," said Michael Hewson, a market analyst at CMC Markets UK.

At the close of trading in Europe, France's CAC-40 was down 0.7 per cent to 3,742 while the DAX in Germany was off 0.9 per cent to 7,910. The FTSE index of British shares was flat, down just three points at 6,303.

U.S. markets fall on manufacturing survey

By contrast, lacklustre data in the U.S. comforted Asian markets over the past day — since it indicated the U.S. Federal Reserve would move slowly to reduce its purchases of financial assets that have buoyed markets by pushing down interest rates.

On Monday, Wall Street rallied after an ISM manufacturing survey for the U.S. that showed a weak rebound in June thanks to new orders and higher production. The survey boosted stock markets as investors estimated it was strong enough to show the recovery is on track, but not so strong as to encourage the Fed to start ending its monetary stimulus program ahead of time.

However, U.S. markets dropped by the end of the day on Tuesday, with the Dow Jones Industrial Average down 0.3 per cent to 14,932, and the S&P 500 down 0.1 per cent to 1,614 points.

Many Asian stocks rose earlier in the day. Tokyo's Nikkei 225, the region's heavyweight index, jumped 1.8 per cent to 14,098.74. Australia's S&P/ASX 200 was up 2.6 per cent at 4,834.00 after the country's central bank left interest rates unchanged and said the Australian dollar is likely to continue falling, easing pressure on exports.

In China, the Shanghai Composite Index reversed early losses to rise 0.6 per cent to 2,006.56 after reports on Monday that Chinese manufacturing weakened in June amid a credit crunch. Hong Kong's Hang Seng fell 0.7 per cent to 20,658.65, led by Chinese banks, which are facing central bank credit restrictions.

Meanwhile, benchmark oil for August delivery rose $1.55 cents to $99.54 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.43 to close at $97.99 a barrel on Monday.

With files from CBC News