LONDON: European stock markets fell Monday while the euro rebounded from fresh 16-month lows against the dollar as dealers brushed off vows by France and Germany to speed up measures to ease the eurozone crisis.
German Chancellor Angela Merkel hosted French President Nicolas Sarkozy, kicking off a week of high-level talks to lay the groundwork for the first EU summit of the year.
But markets, which had moved narrowly mixed during most of the the day, all turned downwards once the talks were over.
European stock markets closed with London's FTSE index of leading companies down 0.66 percent at 5,612.26 points.
In Paris, the CAC-40 index lost 0.31 percent to 3,127.69 points and in Frankfurt the DAX 30 dropped 0.67 percent to 6,017.23 points.
Elsewhere in Europe, Milan slid 1.67 percent dragged down by the banking sector. Madrid fell by 0.12 percent, Lisbon by 0.54 percent and Amsterdam slipped 0.21 percent.
In Switzerland, where the central bank chief resigned in a scandal involving a foreign exchange deal by his wife, shares lost 0.44 percent.
The euro struck a 16-month low at $1.2666 in Asian trading hours before recovering to $1.2743, which compared with $1.2717 in New York on Friday.
"Merkel and Sarkozy's pledge to accelerate their contributions to the eurozone's bail-out fund following today's summit was vaguely encouraging," analysts from Capital Economics said.
"But far more striking was their lukewarm support for Greece and concession that keeping the eurozone together was an 'ambitious' goal," they added.
The duo at the heart of European efforts to stem the debt-driven turmoil threatening the single currency gathered in Berlin for their first monthly tete-a-tete in what is certain to be a rocky year.
Sarkozy said after the talks that an agreement on stricter budgetary rules tying in all EU members except Britain should be signed by March 1 and Merkel announced Paris and Berlin were ready to accelerate payments into a fund for future bailouts.
US stocks also wavered on Monday as Wall Street awaited the unofficial kickoff of the fourth-quarter earnings season after the markets close.
In midday trade, the Dow Jones Industrial Average slipped 0.10 percent to 12,348.15 points, the broader S&P 500 edged down 0.13 percent to 1,276.20 points while the tech-dominated Nasdaq Composite dropped 0.20 percent to 2,668.99 points.
Prior to the talks, Germany paid a negative return to investors at a debt auction, meaning investors were willing to pay Berlin to hold their money, highlighting the status of Europe's biggest economy as a safe haven in the current debt crisis.
But doubts did emerge over even this safe-haven status, as German industrial production dived by a worse-than-expected 0.6 percent month-on-month in November.
Yields in eurozone countries under more urgent threat have spiked as investors demand top returns for lending money to the bloc's most indebted countries such as Greece and Italy.
Banks' overnight deposits with the European Central Bank meanwhile have hit a new record, 463.6 billion euros, a possible sign of ongoing tensions in the financial system despite unprecedented injections of liquidity.
Concerns about Spain and Italy, most notably in their banking sectors, are driving fears they could be next to need bailouts from the European Union and International Monetary Fund, after Greece, Ireland and Portugal.
Ratings agency Moody's warned Monday that Spain must squeeze an "unprecedented" 40 billion euros ($51 billion) out of the budget in 2012 so as to meet its deficit-cutting target.
Asian stock markets closed mixed on Monday as worries over the eurozone debt crisis were tempered by better-than-expected US jobs data on Friday.
South Korea closed down 0.90 percent and Hong Kong closed up 1.47 percent. Financial markets in Japan were closed on Monday for a public holiday.
Comments
Comments are closed for this article.