LONDON – Greek stocks rose, then led European markets lower Wednesday amid mounting skepticism about the Greek government’s ability to get a grip on its finances as workers threatened strike action against austerity measures.

In Europe, the FTSE 100 index of leading British shares was down 14.54 points, or 0.3 percent, at 5,268.77 while Germany’s DAX fell 6.98 points, or 0.1 percent, to 5,702.68. The CAC-40 was 2.47 points, or 0.1 percent, lower at 3,809.66.

On Wall Street, the Dow Jones industrial average was down 11.34 points, or 0.1 percent, at 10,285.51 soon after the open while the broader Standard & Poor’s 500 index fell 2.78 points, or 0.3 percent, to 1,100.54.

Greece’s main composite index, which had traded over 1.5 percent higher earlier in the day after the European Commission gave its backing to the Greek government’s plan to reduce its borrowing, was down 1.6 percent at 2,024.50.

The turnaround in the stock market was directly related to developments in the bond markets where the spread between Greek 10-year bonds and the benchmark Germany bunds narrowed, but then widened — a sign that investor concerns of a Greek debt default have not gone away despite the Commission’s endorsement.

At the start of the day the spread was around 350 basis points and that dropped to 330 basis points after the EU’s broadly-positive pronouncement on the Greek government’s plan to reduce its budget deficit to below 3 percent by 2012 from 2009′s 12.7 percent. However, by mid-afternoon London time, the spread was back around 350 basis points. One hundred basis points equal one percent.

“Investors are just wondering whether the initial reaction was overdone,” said Neil Mackinnon, global macro strategist at VTB Capital.

He said investors remain skeptical the government can actually pull it off given possible strikes over the coming days and weeks.

“The bottom line is that the type of cuts that are required could escalate social and political disenchantment,” said Mackinnon.

In a televised address, Greek Prime Minister George Papandreou said his government would impose a blanket civil service pay freeze, hike fuel taxes, increase retirement ages and speed up an overhaul of the country’s tax system. These measures will be presented in Parliament next week instead of at the end of the month.

The ambitions are high as are the stakes and the markets are increasingly coming round to the view, that despite Papandreou’s good intentions, it will just be too difficult to achieve without outside support.

“Ultimately, it may require a stronger indication from the EC and other eurozone governments that it stands ready to support Greece before yields fall significantly,” said Ben May, European economist at Capital Economics.

On Thursday, investors will focus in on what, if anything, European Central Bank president Jean-Claude Trichet says about the situation surrounding Greece when he delivers his monthly press conference following the expected decision to keep European rates unchanged at 1 percent.

The turnaround in sentiment towards Greek stocks and bonds was echoed in the currency markets where the euro was back under pressure.

Having advanced above $1.40, the euro was back down at $1.3940 by mid-afernoon time and traders are speculating that it could soon be falling back down to Monday’s six and a half month low of $1.3854.

Aside from Greece, the focus in markets remains on the economic data, culminating Friday with the U.S. nonfarm payrolls report for January, which often sets the stock market tone for a week or two.

The key piece of data later Wednesday will be the Institute for Supply Management’s monthly survey into the services sector and investors will be looking to see if it comes in as strong as the manufacturing equivalent earlier this week.

Earlier, Wall Street’s rally Tuesday in the wake of positive housing data helped Asian stocks march higher.

Japan’s Nikkei 225 stock average added 33.24 points, or 0.3 percent, to 10,404.33 and Hong Kong’s Hang Seng jumped 449.90 points, or 2.2 percent, to 20,722.08. South Korea’s Kospi was up 19.21, or 1.2 percent, to 1,615.02.

Elsewhere, Shanghai’s market marched 2.4 percent higher and Australian stocks rose 0.9 percent.

Oil prices fell, with benchmark crude for March delivery down 10 cents at $77.13. The contract jumped more than $2 overnight on reports crude demand could improve.

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AP Business Writer Jeremiah Marquez in Hong Kong contributed to this report.