In midday deals, London's FTSE 100 stocks index dropped 0.91 percent to 5,467.48 points, Frankfurt's DAX 30 shed 0.93 percent to 5,963.86 points and in Paris the CAC 40 lost 0.17 percent to 3,043.85. "European stocks remain volatile as the market struggles to maintain a firm trend in either direction," said ETX Capital trader Manoj Ladwa. "Given ongoing sovereign debt issues, and growth in the eurozone stagnant at best, markets are likely to remain undecided for the foreseeable future." The euro sank to $1.3429 -- its lowest point since October 10 -- but then rallied to $1.3532, down slightly from $1.3536 late in New York on Tuesday. "Traders are transfixed by the euro currently," said David Morrison, an analyst at GFT traders. "With eurozone bond yields also under pressure, tomorrow's auction of French 2-, 4- and 5-year notes is being eyed nervously," he told AFP. On the bond markets Wednesday, the 10-year cost of borrowing for Italy briefly rose back above 7.0 percent -- a level, if it lasts, widely considered to make the refinancing of Italian debt unsustainable. France meanwhile is having to pay about twice as much as Germany to borrow for 10 years and this too is a central concern on financial markets, partly because the architecture of EU bailout mechanisms rests on France's top AAA rating. New leaders in debt-ridden Italy and Greece have offered investors some hope that they can solve their fiscal crises and so avoid the spread of debt contagion which is threatening to drag the world economy into recession. Asian shares fell on Wednesday as markets weighed positive US economic data against ongoing concerns about Europe's debt crisis and its anaemic growth. Hong Kong sank 2.0 percent, Tokyo closed off 0.92 percent, Sydney fell 0.89 percent and Seoul was 1.59 percent lower. Shanghai ended 2.48 percent down. "Contagion has spread across eurozone bond markets like wildfire and the lack of action to create a firewall means that there is little to extinguish it," Credit Agricole said in a note to clients. Economist Mario Monti replaces Silvio Berlusconi as Italy's new prime minister on Wednesday, tasked with saving the eurozone heavyweight from a crisis that has set off alarm bells around the world. In Athens, newly installed premier Lucas Papademos was racing to adopt deeply unpopular reforms demanded by Greece's international creditors before the release of bailout loans crucial to avoiding bankruptcy next month. Papademos' government is expected to be confirmed in a vote of confidence on Wednesday but must hold early elections in a few months. Wall Street was meanwhile buoyed on Tuesday by news that US retail sales continued to rise in October. A key manufacturing index for New York also returned to its first positive reading in six months in November, suggesting an upturn in business conditions.