European stocks, euro dip ahead of Slovak vote

Tue Oct 11, 2011 6:30am EDT
 
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By Anirban Nag

LONDON (Reuters) - European shares and the euro fell on Tuesday, with investors increasingly edgy ahead of a finely balanced vote by Slovakia's parliament to ratify an expansion of the euro zone's rescue fund.

Slovakia is the last of the 17-member bloc yet to vote on a deal agreed by the region's leaders in July to boost the size and powers of the European Financial Stability Facility (EFSF).

All 17 euro zone states must ratify the EFSF expansion for it to come into effect. Three of the four parties in the center-right government in Slovakia want to ratify it but a fourth has threatened to vote against it.

Opposition parties could move to back the fund in a follow-up vote to any rejection, but even an initial failure by parliament to pass it would rattle markets and could bring an end to a rally in riskier assets like stocks, commodities and higher-yielding currencies.

The vote was expected to take place between 10 a.m. EDT and 11 a.m. EDT.

"The Slovakian vote is on a knife-edge. It could go either way. But (if they vote against) they can vote again, to get -- from the European perspective -- the right result. The market is thinking that they are holding out, and playing hardball," said Jeremy Batstone-Carr, strategist at Charles Stanley.

The FTSEurofirst 300 .FTEU3 index of top European shares was down 0.6 percent at 957.95 points, after rising 1.7 percent on Monday. Stocks were lower across the board, with the STOXX Europe 600 Basic Resources Index among the biggest losers.

U.S. stock futures pointed to a lower start on Wall Street. The S&P futures was down 0.65 percent, while the Dow Jones industrial average futures was 0.6 percent lower. The U.S. markets were likely to take direction from some major earnings announcements later.   Continued...

 
<p>A man looks at a stock quotation board outside a brokerage in Tokyo September 26, 2011.REUTERS/Toru Hanai</p>