World stocks, euro slip on Europe wrangling

Still, guidelines on the euro zone's rescue fund indicated that the facility would be able to buy bonds in the secondary market, putting some pressure on US Treasuries.

Optimism had been growing that the weekend meeting of European Union leaders in Brussels would come up with a substantial plan for dealing with the debt crisis, primarily through ramping up the bloc's bailout mechanism, the EFSF.

But concerns remain about a dispute between France and Germany over how to increase the rescue fund's firepower, which could delay the aid package that is currently in the works.

Wall Street stocks opened nearly flat but briefly edged higher after data showing US Mid-Atlantic factory activity rebounded in October. World stocks as measured by MSCI were down 0.8 percent, while European shares slipped 0.6 percent.

The US Dow Jones industrial average was up 15.29 points, or 0.13 percent, at 11,519.91. The Standard & Poor's 500 Index was up 1.15 points, or 0.10 percent, at 1,211.03. The Nasdaq Composite Index was down 8.28 points, or 0.32 percent, at 2,595.76.

News that deposed Libyan leader Muammar Gaddafi had died of wounds suffered in his capture near his hometown of Sirte on Thursday had little market impact.

The euro fell against the dollar after a report said the German government does not rule out postponing a European Union summit planned for this Sunday.

"We have the EU summit this weekend and there's probably a decent chance that we don't have any concrete proposals in place," said Ronald Simpson, managing director of global currency analysis at Action Economics in Tampa, Florida.

Citing sources from both Chancellor Angela Merkel's center-right coalition and from her government, German newspaper Die Welt said the stalled negotiations on the possible leveraging of the euro zone bailout fund was the reason for the possible delay.

The euro last traded down 0.1 percent at $1.3741.

In the US Treasury market, benchmark 10-year note prices fell 3/32 in price to yield 2.17 percent.

The rescue fund guidelines also reversed gains in core German bonds, where the yield was up slightly.

Earlier, the spread between the German yield and that of France and Spain widened.

In other markets, Brent crude oil prices gained more than $1 a barrel.

Copyright Reuters, 2011