European Markets Drop on Growing Threat of US-Led Action in Syria

European markets outside of Italy opened lower on Wednesday as fears of potential air strikes by the US and its allies in Syria dampened investor sentiment.

The Stoxx Europe 600 index opened 0.4% lower to 297.91.

Britain's FTSE 100 and Germany's DAX 30 opened 0.5% lower.

France's CAC 40 opened 0.3% lower.

Spain's IBEX was down 0.63% in early trade.

Italy's FTSE MIB was up 0.55% in early trade.

US president Barack Obama was still undecided on taking military action in Syria, but his options categorically did not include regime change, according to White House spokesman Jay Carney.

As multiple reports quoting anonymous US officials warned that strikes in Syria would begin in a matter of days, Carney stressed that Obama had not planned to convene Congress over a possible attack.

Carney said it was preposterous to suggest that president Bashar al-Assad's forces were not responsible for the chemical attack in the Damascus suburb of Ghouta, which resulted in the deaths of 300 people.

Earlier, US Defense Secretary Chuck Hagel told the BBC that the US military is "ready to go" if President Obama orders action against Syria.

British prime minister David Cameron has recalled parliament for an urgent debate on Syria.

MPs will formally debate what Britain should do in response to the alleged gas attack in which hundreds died.

"This selloff is a clear knee-jerk reaction by global market participants who are clearly reducing risk over fears the situation in Syria could deteriorate substantially. It's just a typical case of irrational fear driving investors' decision making," said Tim Radford, global analyst at Rivkin Securities.

"The best opportunity is to buy the fear driven selloff, and wait until global leaders restore certainty over the chemical attacks in Syria. It still remains unlikely we'll see a full scale military conflict in Syria, but rather a short-term aerial strike on key strategic targets important to the Assad regime."

Market participants will be tracking Bank of England Governor Mark Carney's policy speech during the day.

In company news, UK-based security services provider G4S reported a pre-tax loss for the first-half. Its operating margin dropped to 5.5%, from 5.9% a year ago. The company said that pricing pressures in the UK and Europe and a lost prison contract in the Netherlands impacted margins.

French hotel group Accor, Russian bank Sberbank and gold miner Polymetal will all put out earnings updates during the day.

Elsewhere, market research firm Gfk's forward-looking consumer confidence survey showed that German consumer moral eased a bit as the country heads for elections in September.

Earlier, German Chancellor Angela Merkel said that Greece should never have been allowed into the 27-nation European Union.

"Chancellor Schroeder accepted Greece in and weakened the Stability Pact and both decisions were fundamentally wrong, and one of the starting points for our current troubles," media reports quoted Merkel as saying on Tuesday.

In Asia and the US

In Asia, the Japanese Nikkei finished 1.51% lower on Tuesday. South Korea's Kospi ended 0.07% lower while Australia's S&P/ASX finished 1.00% lower.

Earlier in Asia, markets opened lower following a global sell-off as market participants rushed to cut their risk exposure ahead of a potential US military attack on Syria.

On Wall Street, indices ended lower on growing worries over possible US military intervention in Syria.

The Dow Jones Industrial Average finished 170.33 points or 1.14% lower at 14,776.13, pulled down by Bank of America and Microsoft.

The S&P 500 index ended 26.30 points or 1.59% lower at 1,630.48 while the Nasdaq Composite closed 79.05 points or 2.16% lower at 3,578.52.