BRUSSELS – The EU on Tuesday warned the United States against protectionism after a European-led consortium pulled out of the bidding for an Air Force contract, saying the terms had been altered to favor a U.S. company.

EADS, the parent company of Airbus, had partnered with Northrop Grumman to vie for the tanker project, but their consortium pulled out on Monday. They said the terms of the deal appeared designed to eliminate its design in favor of a smaller jet offered by rival Boeing Co.

The announcement left Boeing as the only bidder for the project. It is offering a version of the 767 commercial airplane to replace the U.S. Air Force's 1960s-era fleet of KC-135 tankers.

"The European Commission would be extremely concerned if it were to emerge that the terms of tender were such as to inhibit open competition for the contract," the European Commission said in a statement.

In the United States, the political fallout from the announcement was also swift, with several U.S. lawmakers — including Sen. John McCain, R-Ariz., President Barack Obama's campaign rival in 2008 — saying they regretted the Northrop Grumman/EADS decision.

In 2008, the EADS-led consortium was awarded a contract for the tanker fleet, but Boeing protested and the deal was annulled later that year.

In December, Northrop Grumman/EADS expressed serious concerns to the Pentagon and the Air Force that the new criteria for the project were slanted in favor the Boeing design.

"It is highly regrettable that a major potential supplier would feel unable to bid for a contract of this type," said EU Trade Commissioner Karel De Gucht. "Open procurement markets guarantee better competition and better value for money for the taxpayer."

The EU noted that the trade balance in defense equipment with the 27-nation EU has traditionally been heavily in favor of the American side, and that in 2008 the US exported $5 billion worth of defense materials while importing only $2.2 billion from the European side.

"The Commission will be following further developments in this case very closely," the statement said.

In Germany, Economy Minister Rainer Bruederle said on Tuesday he was disappointed by the developments in the U.S. and warned the situation had "signs of protectionism."

"The free market should not be unilaterally restricted," he said.

In Paris, EADS CEO Louis Gallois maintained that the EADS design — based on Airbus A330 — makes a better tanker than the Boeing alternative.

"We deeply regret that the U.S. Air Force will not get the best available airplane," he told journalists.

He said the decision doesn't change EADS' intention to boost its presence on the American defense market.

Gallois said the consortium was talking to the administration in Washington to recoup some of the money it spent on its bids.

Also on Tuesday, EADS reported that spiraling costs on its new military airlifter, the A400M, and its A380 superjumbo had led to losses in the fourth quarter and full year but said its outlook visibility was improving.

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Associated Press correspondent Emma Vandore in Paris and David Rising in Berlin contributed to this report.

MUMBAI, India – Ford Motor Co. launched its first made-for-India compact car Tuesday, as the U.S. automaker continues its push into fast-growing Asian markets.

The four-door Figo, Italian for "cool," is the Dearborn, Michigan-based automaker's first car designed — and priced — for the mass Indian market.

"Come heat, come dust, come monsoon rains or Delhi traffic, the Figo was born and bred for India," said Michael Boneham, president and managing director of Ford India.

As the global auto industry suffers, India has been enjoying an auto boom. An economic rebound, rising incomes and pent-up demand drove car sales to 1,370,659 vehicles from April to February, 25 percent more than during the same period the previous year.

Ford has ramped up investment in China and India, but has been slow to adjust to the proclivities of Indian carbuyers, three quarters of whom buy super-small, super-affordable cars.

The luxurious sedans Americans favor find little room on India's teeming streets, and they're priced stratospherically out of reach for a nation where the per capita income is about 43,750 rupees ($960).

The Figo is different.

Ford squeezed the car into a tiny frame — 3.8 meters (12.5 feet) by 1.7 meters (5.5 feet) — to ease its passage through the tide of bullock carts, angry taxis, handcarts, motorbikes and cows that clog city roads.

And they used easy-to-replace components, like bumpers, to handle the unavoidable dents and dings.

"The Figo team went to great lengths to ensure that key components are easily and affordably replaced," Boneham said.

The car also has extra durable lubricating and cooling systems, to deal with India's extreme heat and torrential rains.

But its most Indian feature of all is the price.

Starting at 349,900 ($7,690), the Figo is within reach of "Sandeep," Ford's vision of its archetypal consumer — a 27-year-old man, recently married and ambitious, with an income of 300,000 to 400,000 rupees ($6,000 to $8000) a year.

Sandeep may be budget conscious, but he's not without aspirations. Higher-end Figos come with keyless entry and Bluetooth connectivity.

Like other global auto majors, Ford also hopes to turn India into a small car export hub. Boneham said the Figo would first ship to South Africa.

"We'll be adding more markets as people across the region see how cool the Figo really is," he said.

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Associated Press writer Muneeza Naqvi in New Delhi contributed to this report.

LONDON – European stocks fell Tuesday as corporate earnings from plane maker EADS NV disappointed expectations and investors stepped back to assess the pace of the global economic recovery in the wake of strong U.S. jobs data and the debt crisis in Greece.

Britain's FTSE 100 benchmark index was down 0.5 percent at 5,576.45 while Germany's DAX was 0.4 percent lower at 5,853.76. France's CAC-40 shed 0.4 percent to 3,889.43.

Asian indexes were little changed, with Tokyo closing down but Chinese benchmarks edging up, and Wall Street was expected to fall on the open. Dow industrials futures were down 33 points at 10,505.00 and Standard & Poor's 500 futures were down 3.1 points at 1,134.00.

Earnings reports mostly disappointed in Europe. Defence and aerospace company EADS NV reported that spiraling costs on its military transport plane and its A380 superjumbo led to losses in the fourth quarter and full year. Its shares slumped 4.5 percent to euro15.16 ($20.71) in Paris morning trade.

Financial shares were somewhat weaker after Moody's credit ratings agency said the withdrawal of stimulus measures would leave some banks in Britain fragile. Royal Bank of Scotland was down 2.2 percent and Lloyds Banking Group fell 1.8 percent. Lower commodity prices, meanwhile, weighed on mining stocks.

Trading was subdued, however, as investors took stock of recent swings in sentiment.

"The market seems to be in the mood to take a breather at the moment with little appetite for the choppiness and volatility witnessed over the past week," said Stuart Bennett, forex analyst at Credit Agricole CIB.

Greek Prime Minister George Papandreou was due to meet President Barack Obama later Tuesday to discuss stricter regulations on hedge funds and currency traders that Athens believes aggravated their crisis. Shares of MAN Group, the world's largest publicly traded hedge fund, were down 2.5 percent in London.

Pledges of support for Greece from France and Germany over the weekend lacked concrete details, and investors will keep an eye on the country's financial markets — particularly the rate at which is can raise money on capital markets — for signs that confidence in being restored.

Greece last week raised euro5 billion ($6.83 billion) in a 10-year bond sale, but the 6.25 percent rate it paid is still considered too high. The country would like to borrow at more moderate rates.

To avoid future fiscal crises, France and Germany have floated the idea of creating a European monetary fund which would have the authority to enforce budget cuts and offer funds to countries facing debt trouble. Such a fund, however, would not be of help to Greece now as it would take months to agree.

In Asia, markets were cautious ahead of key reports on the region's two biggest economies, China and Japan, that are due Wednesday. The strength of Chinese trade data could give investors a better sense of when and how Beijing will wean the country off its economy-boosting measures. A report on Japanese machinery orders, a key gauge of company spending, could provide more insight into the state of global trade and the world's second-largest economy.

Tokyo's Nikkei 225 stock average fell 18.27 points, or 0.2 percent, 10,567.65. Hong Kong's Hang Seng added 0.1 percent to 21,207.55 and South Korea's main benchmark edged up 0.1 percent to 1,660.83.

Shanghai's market climbed 0.5 percent, while markets in Australia, Taiwan and Singapore rose as well. India's market was down.

Oil prices slipped below $81 a barrel, losing momentum after a monthlong run-up fueled by growing investor optimism about global economic growth. Benchmark crude for April delivery was down $1.35 cents to $80.52 a barrel after adding 37 cents overnight.

The dollar was lower at 89.85 yen from 90.28 yen and the euro weakened to $1.3565 from $1.3631.

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