NEW YORK (CNNMoney) -- U.S. stocks recovered from earlier losses to end little changed Wednesday as concerns about Europe's weak economy and debt crisis weighed on the market.
The Dow Jones industrial average () lost 13 points, or 0.1%, to end at 12,449. The S&P 500 ( ) edged up less than 1 point to 1,292. The Nasdaq ( ) gained 8 points, or 0.3%, to 2,711.
Investors were rattled by a report showing the German economy contracted 0.25% in the last three months of the year. The data added to concerns that the eurozone is in the midst of a mild recession.
"Germany is the lighthouse of the European Union, and it spooks investors if that lighthouse is going dim," said Rob Russell, president of Dayton, Ohio-based investment management and financial planning firm Russell & Company.
The euro slid as much as 0.8% to a 16-month low around $1.26. The euro was under pressure ahead of a meeting of the European Central Bank on Thursday.
The ECB is widely expected to hold interest rates steady at 1%, after cutting rates at its last two meetings. But some analysts expect ECB President Mario Draghi to signal a prolonged period of low interest rates.
That means the euro has further to fall, according to analysts at Capital Economics in London, who expect the currency to hit $1.10 this year on continued worries about a eurozone break-up.
Still, Italian Prime Minister Mario Monti and German Chancellor Angela Merkel sounded upbeat about finding a solution to Europe's debt crisis following a meeting in Berlin.
Meanwhile, investors await key auctions of Italian and Spanish bonds on Thursday and Friday. Both nations need to refinance billions of euros of debt this year, and investors have been demanding higher interest rates, stoking concerns about the governments' solvency.
"A lot of investors don't want to touch Europe, even with a 10-foot pole," said Russell. "They're exiting the euro currency in favor of the dollar because of its perceived safe-haven status."
U.S. stocks are coming off of an advance Tuesday, which pushed the Dow and S&P 500 to their highest closing levels since July.
Financial stocks, which were among the biggest gainers Tuesday, were on the rise again Wednesday. Shares of Bank of America (Fortune 500), Morgan Stanley ( , Fortune 500), Citigroup ( , Fortune 500) and JPMorgan Chase ( , Fortune 500) were up between 0.3% and 2%.,
Investors have been encouraged by a recent string of upbeat reports on the U.S. economy. That trend could continue Thursday when government data is expected to show an increase in December retail sales.
"In this environment, the U.S. economy is not a bad spot to be," said Ethan Anderson, senior portfolio manager at Rehmann Financial.
World markets: European stocks slumped. Britain's FTSE 100 ( ) slipped 0.4% and the DAX ( ) in Germany edged lower 0.2%, while France's CAC 40 ( ) fell 0.2%.
Asian markets ended mixed. The Shanghai Composite () closed down 0.4%, while the Hang Seng ( ) in Hong Kong gained 0.8% and Japan's Nikkei ( ) rose 0.3%.
Companies: Urban Outfitters ( ) shares plunged after the retailer announced late Tuesday that CEO Glen Senk is resigning. Richard Hayne, a co-founder of the company, will take his place.
Shares of Lennar () rose even after the homebuilder announced earnings that fell short of estimates. Its revenue was better than expected.
Shares of Crocs () spiked after the company said it expected its fourth-quarter revenue to come in at the high end of its forecast and full-year sales to top $1 billion.
Shares of BP (Fortune 500) to invest more than $1 billion in wind farms in Pennsylvania and Kansas.) fell after the oil company announced a deal with Sempra Energy ( ,
Economy: The Federal Reserve said economic conditions across its 12 districts continued to expand moderately from November to December, according to the latest edition of the Beige Book.
The Fed said retailers reported strong holiday sales in December, but the residential real estate market was down in all districts.
Oil for February delivery slipped 51 cents to end at $101.71 a barrel.
Gold futures for February delivery rose $9 to $1,640.50 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 1.92% from 1.97% late Tuesday.
|What we want Apple to unveil at WWDC|
|Millennials squeezed out of buying a home|
|7 traits the rich have in common|
|Big Data knows you're sick, tired and depressed|
|Your car is a giant computer - and it can be hacked|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.60%||3.72%|
|15 yr fixed||2.77%||2.69%|
|30 yr refi||3.56%||3.59%|
|15 yr refi||2.77%||2.75%|
Today's featured rates: