World stocks and the euro fell on Thursday on fresh doubts that the keenly awaited EU summit this weekend will result in a comprehensive plan to rein in the euro zone debt crisis.
A media report that the German government had not ruled out postponing the summit, set for Sunday, poured another dose of cold water on optimism over the weekend meeting of European Union leaders in Brussels.
The news out of Europe kept investors on their toes. Worries that the debt problems could cause another global recession have been at the forefront for months.
"It's a Ping-Pong game -- people have been burned by reacting to individual news stories only to have them refuted, withdrawn or contradicted," said Stephen Massocca, managing director, Wedbush Morgan in San Francisco.
Citing sources from both the center-right coalition of German Chancellor Angela Merkel and from her government, German newspaper Die Welt said the possible delay was due to stalled negotiations on the possible leveraging of the euro zone bailout fund.
Senior EU sources and the Austrian Finance Ministry said
they were unaware of any plan to postpone the weekend meeting.
Still, the euro fell to a session low against the dollar. It was last down 0.5 percent at $1.3680 after falling as low as 1.3669.
World stocks as measured by MSCI tumbled 1.4 percent, while European shares dropped 1.3 percent.
Wall Street stocks also declined, as the news out of Europe overshadowed data showing an unexpected rebound in factory activity in the U.S. mid-Atlantic region in October.
The Dow Jones industrial average was down 84.69 points, or 0.74 percent, at 11,419.93. The Standard & Poor's 500 Index was down 8.56 points, or 0.71 percent, at 1,201.32. The Nasdaq Composite Index was down 35.13 points, or 1.35 percent, at 2,568.91.
On Wednesday, French President Nicolas Sarkozy said that plans to tackle the European debt crisis had stalled with Paris and Berlin at odds over how to increase the region's bailout fund, the European Financial Stability Facility.
There's "growing investor realization that the upcoming European policymakers' summit may not yield a lasting solution to the ongoing euro zone debt crisis after all," said Samarjit Shankar, managing director of global FX strategy at BNY Mellon in Boston.
U.S. Treasury prices edged higher. Benchmark 10-year notes were last up 3/32, yielding 2.15 percent.
Pressuring bonds earlier, guidelines on the euro zone's rescue fund indicated that the facility would be able to buy bonds in the secondary market.
For debt crisis in graphics: click http://r.reuters.com/hyb65p
For government bond spreads: click http://r.reuters.com/kus82s
For asset returns in 2011: click http://r.reuters.com/suz52s
OIL REVERSES EARLIER GAINS
Uncertainty about the weekend meeting in Europe reversed gains in oil, with Brent crude oil prices down 37 cents at $108.02.
News that deposed Libyan leader Muammar Gaddafi had died of wounds suffered in his capture near his hometown of Sirte on Thursday had little market impact.
"The regime had already fallen," said Olivier Jakob, oil analyst at Petromatrix. "It will bring additional peace to the country but oil exports are already in the process of coming back -- so there is no great change to the short-term supply and demand picture."
Gold fell for a fourth consecutive day.
Solid earnings helped to limit losses in stocks. In Europe, shares of Nokia, the world's largest cellphone maker, advanced 5.5 percent after its earnings beat forecasts, helped by strong sales of basic cellphone models and sparking hopes that the company's worst days are over U.S.-listed shares of Nokia jumped 5.2 percent to $6.44.
U.S. economic data also helping limit losses on Wall street. The Philadelphia Federal Reserve Bank said factory activity in the U.S. mid-Atlantic region unexpectedly expanded in October to its highest level in six months, supporting views that the U.S. economy recovery is progressing, albeit at a slow pace.
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