Uncertainty over EU summit outcome hurts euro, world stocks

Wed Dec 7, 2011 7:51am EST
 
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By Richard Hubbard

LONDON (Reuters) - The euro edged down on Wednesday and European stocks trimmed gains after a German government official dented hopes that Friday's crunch EU summit will generate a comprehensive deal to resolve the euro zone's debt crisis.

Wall Street looked set to open higher on lingering optimism that a deal would eventually be reached.

The senior government official, briefing reporters on condition of anonymity, said Berlin is increasingly pessimistic about the chances of a deal, accusing some governments of failing to grasp the gravity of the situation.

The euro lost around two-tenths of a cent to $1.3373 in response, handing back earlier gains.

EU officials were reported to have been working on a last-minute proposal to raise the combined lending limit of the EFSF rescue fund and the permanent structure that will replace it, the ESM. The report had boosted optimism a deal would be reached.

Rod Paris, chief investment officer at Standard Life Investments, says market expectations would be met if the summit produced a clear outline for how the crisis would be resolved.

"We would like to understand the road map and the liquidity provisions as we march along that road," Paris said.

"Be ready for either extreme depression or euphoria."   Continued...