Euro, global stocks slide on fiscal plan anxiety

By Herbert Lash

NEW YORK | Mon Dec 12, 2011 

(Reuters) - Global stock markets and the euro slid on Monday as investors took a dim view that a plan last week to enforce greater fiscal discipline in the euro zone was enough to quell a two-year-old debt crisis.

Initial market enthusiasm on Friday faded due to the legal uncertainty surrounding the pact and the absence of a sufficiently strong financial backstop for the single currency.

The euro fell 1 percent and borrowing costs for Italy and Spain rose as a plan to increase fiscal unity in the European Union did not restore financial market confidence.

Italian 10-year bond yields traded to yield 6.76 percent, up from about 6.38 percent on Friday, while investors rushed to the safety of U.S. government debt. The price of the benchmark 10-year U.S. Treasury note was up 17/32, pushing its yield down to 2.0 percent.

"The pattern is to get optimism leading into these meetings, and almost inevitably we get disappointment," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. "Nothing really has changed."

The FTSEurofirst 300 index .FTEU3 of top regional shares in Europe fell 1.1 percent to 975.05 and Wall Street opened lower about 1 percent lower.

The Dow Jones industrial average .DJI was down 118.22 points, or 0.97 percent, at 12,066.04. The Standard & Poor's 500 Index .SPX was down 15.57 points, or 1.24 percent, at 1,239.62. The Nasdaq Composite Index.IXIC was down 37.50 points, or 1.42 percent, at 2,609.35.

Brent crude slipped below $108 per barrel.

Brent futures for January delivery fell $1.28 to a low of $107.34 a barrel. U.S. crude futures fell $1.45 to $97.96.

"The austerity measures will have a profoundly negative impact on economic growth and will make 2012 a very challenging year in economic terms," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.

Spot gold prices fell $43.20 to $1,667.10 an ounce.

(Reporting by Marius Zaharia, Francesco Canepa, Christopher Johnson and Maytaal Angel in London; Writing by Herbert Lash; Editing by Padraic Cassidy)