Michael Probst, Associated Press
A trader makes a phone call at the stock market in Frankfurt, Germany, Tuesday, Nov. 15, 2011, where the curve of the German stock index went down in the morning but went up again in the afternoon.

BANGKOK — World stock markets fell Wednesday as Europe's festering debt crisis overshadowed figures showing that Americans increased their retail spending for a fifth straight month.

Benchmark oil slipped below $99 per barrel while the dollar rose against the euro and was little changed against the yen.

European shares fell in early trading. Britain's FTSE 100 slipped marginally to 5,517.44. Germany's DAX shed 0.9 percent to 5,878.33 and France's CAC-40 lost 0.4 percent to 3,036.76.

Wall Street also braced for a lower opening, with Dow Jones industrial futures falling 0.7 percent to 11,957 while S&P 500 futures lost 0.8 percent at 1,244.50.

The retreat in Europe followed losses in Asia, where Japan's Nikkei 225 index lost 0.9 percent to close at 8,463.16, a six-week closing low. Hong Kong's Hang Seng dropped 2 percent to 18,960.90 and South Korea's Kospi shed 1.6 percent to 1,856.07. Benchmarks in Singapore, Taiwan, and Australia also fell.

Mainland China's benchmark Shanghai Composite Index lost 2.5 percent to 2,466.96, its lowest closing this month. The smaller Shenzhen Composite Index dropped 2.6 percent to 1,059.24.

Data on retail sales showed Americans spending more on autos, electronics and building supplies in October — and at a faster rate than expected. Many saw the result as a sign that the U.S. economy may well avoid another recession as consumer spending is the biggest component of the country's GDP.

Still, investors could not get past the mammoth debt loads carried by Greece and Italy, which are threatening to trigger an all-out financial crisis on the continent.

"The world does not believe the crisis is solved," said Francis Lun, managing director of Lyncean Holdings in Hong Kong. "The market is still very jittery and still worried about possible effect of economic slowdown and recession in Europe. I think this will depress the market for a quite a long period."

And the problem isn't just isolated to Greece or Italy, he said.

"It's the problem of the entire Western world," Lun said. "For Europe, it overborrowed for 12 years and for the U.S., it probably overspent for 30 years — so 30 years of mismanagement cannot be corrected in one day."

On Tuesday, higher interest rates on government debt issued by Italy, Spain and other countries rattled European stock markets. The interest rate on Italy's 10-year bond jumped back above 7 percent, a dangerously high level.

Higher borrowing costs — in the form of extra yields that must be paid for bonds regarded as riskier — are a sign that investors are worried that those countries may have trouble paying their debts.

The debt crisis among the 17 nations that use the euro currency "appears to be deteriorating by the day," analysts at Credit Agricole CIB said in a report. "Contagion has spread across eurozone bond markets like wildfire and the lack of action to create a firewall means that that there is little to extinguish it."

Italy's borrowing rate first crossed the 7 percent threshold last week, raising worries about Rome's ability to manage its debts. Greece, Ireland and Portugal had to get rescued by international lenders when their borrowing rates crossed the same level.

Meanwhile, Chinese property shares were sharply lower amid falling housing prices as government efforts to cool the overheated housing industry take effect. Hong Kong-listed blue chip China Overseas Land & Investment fell 4.6 percent, while Poly Real Estate Group lost 4.8 percent.

Japan's Olympus Corp. soared 15.6 percent amid easing worries that the company — embroiled in a scandal over the concealment of huge investment losses — will be delisted by the Tokyo Stock Exchange.

Shares of Tiger Airways jumped 6.1 percent in Singapore trade after the carrier was cleared to increase its number of flights in Australia ahead of the busy Christmas travel period.

Mainland Chinese shares in real estate, cement, media and financial companies weakened following a report from the International Monetary Fund that warned China's banks could face risks if real estate prices fall sharply or unpaid loans increase. The IMF also said other dangers could arise from growing imbalances in a Chinese economy that relies heavily on exports and investment to drive growth.

Shanghai-listed Ping An Insurance lost 4.6 percent while China Nonferrous Metal Industry lost 4.7 percent.

On Wall Street on Tuesday, the Dow rose 0.1 percent to 12,096.16. The S&P 500 gained 0.5 percent to 1,257.81, and the Nasdaq added 1.1 percent to 2,686.20.

Benchmark crude for December delivery was down 43 cents at $98.94 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.23 to settle at $99.37 in New York on Tuesday.

The euro fell to $1.3532 from $1.3543 late Tuesday in New York. The dollar fell to 76.94 yen from 77.04 yen.

Researcher Fu Ting contributed to this story.