European shares retreat on uncertainty

Global stocks wavered and the euro fell today after Germany dashed expectations of a breakthrough to the euro zone debt crisis at a highly anticipated weekend summit of the European Union.

While German finance minister Wolfgang Schäuble said European governments would adopt a five-point platform to address the two-year-old crisis, he said a definitive solution would not be reached at the summit.

The remarks took the wind out of recent optimism that led global stocks to rally more than 10 per cent in just nine days and pushed benchmark 10-year US Treasury debt yields to post their best three-week advance since late December.

European shares retreated, crude oil extended losses and Wall Street opened lower. The euro fell from a one-month high against the US dollar, sliding 0.8 per cent to $1.3787.

"There's nothing but uncertainty in Europe," said David Ader, head of government bond strategy at CRT Capital in Stamford, Connecticut. "This weekend and today is the perfect example. October 23rd seems to be the deadline for a plan for Europe, but the Germans are balking."

MSCI's all-country world equity index fell 0.1 per cent and the pan-European FTSEurofirst 300 index of top shares fell 0.4 per cent at 971.98 points

On Wall Street, the Dow Jones industrial average was down 57.60 points, or 0.49 per cent, at 11,586.89. The Standard and Poor's 500 Index was down 6.71 points, or 0.55 per cent, at 1,217.87.

Government debt rose, with 10-year US Treasuries gaining 10/32 in price to yield at 2.22 per cent.

Some investors pointed out that EU leaders were further on the road to containing the sovereign debt than they had been, suggesting markets might rebound.

"Although there is still uncertainty surrounding what might ultimately come out of the euro zone, we are infinitely closer to something concrete than we were over the last several weeks," said Brad Bechtel, managing director at Faros Trading in Connecticut.

Reuters