LONDON: European stocks and the euro moved lower Wednesday after a weak sale of German 'gold standard' bonds stoked concerns that no one can be safe from the deepening eurozone debt crisis.
Dealers said investors were shocked by the bond auction in Germany, Europe's paymaster, powerhouse economy and up to now, trusted safe haven for investors anxious to protect their money at all costs.
They said the outcome highlighted eurozone strains as debate over the use of pooled eurobonds to tame the crisis intensified between Germany, opposed, and its partners seeking any way out of the crunch.
The EU meanwhile was unveiling its eurobond plans, sparking a sharp riposte from German Chancellor Angela Merkel that they should not even be discussed at such a time.
Germany was able to sell only 3.6 billion euros' worth of its benchmark 10-year "Bund" out of the 6.0 billion euros on offer, an outcome reflecting "extraordinary nervous market conditions," according a German spokesman.
"There's been a lot of talk lately that perhaps Germany isn't the safe-haven that many people thought it was," UBS currency strategist Chris Walker commented.
In mid-afternoon London trade, the benchmark FTSE 100 index of top companies was down 0.74 percent, Frankfurt's DAX 30 shed 0.14 percent and in Paris the CAC 40 lost 0.81 percent.
Madrid slipped 0.71 percent and Milan fell 0.75 percent. The euro declined to around six-week lows at $1.3388, down sharply from $1.3507 in New York late Tuesday. The dollar rose to 77.26 yen from 76.92 yen.
In New York, stocks extended recent losses on the German lead, with investors downbeat on the outlook after a series of subdued data on US retail sales, manufacturing and jobs.
The blue-chip Jones Industrial Average was down 1.05 percent at around 1500 GMT and the tech-rich Nasdaq Composite fell 1.08 percent.
"Escalating concerns about European debt are once again dominating the headlines. Most notably, a disappointing auction of German bonds is weighing on Wall Street," said Andrea Kramer at Schaeffer's Investment Research.
In Europe, dealers said investors seemed to be at the end of the road, frustrated by all the talk of a solution to the debt crisis and the repeated failure of agreements, especially for bailed out Greece, to stick.
The exchanges over the issue or not of eurobonds were damaging and irrelevant, with the markets needing a definitive position which looks highly unlikely at this stage, they said.
"The reason we're waiting around here (on eurobonds) is because everyone knows the game in Europe is up," said Stephen Gallo, head of market analysis at Schneider Foreign Exchange.
"Everyone knows, I think, that in the near-term, this is less about Greece, Spain or Italy 'complying' with adjustment measures and more about what Germany -- through various means -- is prepared to give," he said.
The markets also had to contend with worryingly weak economic data out of the eurozone and China while the US figures later provided no lead.
Eurozone private sector activity retreated for the third month running in November as businesses fretted about the impact of the debt crisis on the economy, a closely-watched survey showed.
China's manufacturing activity meanwhile slumped to its lowest level in 32 months in November, said banking giant HSBC, renewing fears the Asian powerhouse was losing steam amid global economic woes.
Asian markets ended lower pushed down by the Chinese data and Tuesday's revision to US third quarter growth figures from 2.5 percent to 2.0 percent.
Hong Kong shares tumbled 2.12 percent and Shanghai fell 0.73 percent while Tokyo was closed for a public holiday.
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