Euro, shares slide as EU summit hopes dim

Thu Jun 28, 2012 7:53am EDT
 
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By Richard Hubbard

LONDON (Reuters) - World shares fell and the euro hit a three-week low as divisions among European leaders dashed hopes of urgent measures to tackle the region's debt crisis when they meet later on Thursday in Brussels.

The pessimism pushed yields on 10-year Spanish bonds above 7 percent, and U.S. stock index futures pointed to a lower open on Wall Street .N ahead of the latest weekly jobless claims data.

The European Union's two-day leaders' meeting is expected to produce a broad roadmap for fiscal, financial and political union across the 17-nation currency bloc and may agree measures to boost growth, but German Chancellor Angela Merkel has brushed aside demands from Italy and Spain for rapid action to lower their soaring borrowing costs.

She also poured cold water on proposals backed by France for euro zone countries to assume joint liability for each other's debts.

"It's rare that we've seen this amount of discord going into a summit," said Chris Turner, head of foreign exchange strategy at ING. "On the face of it, it looks like it's going to be reasonably negative for the euro."

A German government source downplayed expectations for the summit, telling Reuters it would take time to resolve the region's sovereign debt crisis, already in its third year.

Data showing German unemployment rose more than expected in June also weighed on investor appetite for euro zone assets.

The common currency fell 0.4 percent to three-week lows of $1.2422 versus the dollar and to 98.65 against the safe-haven Japanese currency.   Continued...

 
A trader looks at data sheets at the Madrid stock exchange June 18, 2012. REUTERS/Paul Hanna