Thursday's meeting between German Chancellor Angela Merkel, French President Nicolas Sarkozy and the new Italian Prime Minister Mario Monti in Strasbourg did not yield any common ground between Germany and France.
The meeting failed to deliver any promise and effectively put to bed any suggestions that Germany is either warming to joint euro bonds or changing the mandate for the European Central Bank to allow them to stabilize bond yields, said IG Markets. "Mix in further action from the ratings agencies Thursday--with Fitch Ratings downgrading Portugal's debt rating and Moody's Investor Service later downgrading Hungary's rating--and risk appetite diminished in what was a liquidity-scarce market," added IG.
It called London's FTSE 100 index down by 19 points at 5109, Frankfurt's DAX index off eight points at 5420 and the CAC-40 index in Paris down nine points at 2813. Any moves to the upside are expected to be under threat Friday as uncomfortably high sovereign bond yields--Greece setting a fresh high and Italy climbing above 7% again--continue to highlight the ongoing euro-zone crisis. As such, market participants are focusing on an Italian bond auction later in the day.
Other than the Italian auction, however, there's little in the way of economic data due for release in the next few hours, while earnings news is looking equally sparse. "With only a shortened trading day on Wall Street to work on as well, perhaps the best we can look for is a generally uneventful session," added IG Markets.
U.S. markets were closed for Thanksgiving Thursday, while in Asia stock markets fell on the lack of progress by European leaders in taming the debt crisis. Japan's Nikkei Stock Average was down 0.1%, while South Korea's Kospi Composite dropped 1.0%. Hong Kong's Hang Seng Index fell 1.3%, while China's Shanghai Composite Index slipped 0.7%.
In foreign exchange markets, the euro fell to a fresh seven-week low of 1.3303 against the dollar amid the continued lack of concrete measures to stem Europe's sovereign debt crisis.
By 0701 GMT, the single currency was at $1.3320 against the dollar, from $1.3348 late Thursday in Toronto, and at Y103.09 against the yen, from Y102.90. The dollar was at Y77.38, from Y77.08.
Spot gold fell $8.70 to $1,687.20 per troy ounce. January Nymex crude oil futures were $0.29 higher at $96.46 per barrel, while January Brent oil futures were down $0.14 at $107.64. The December bund contract was down 0.22 at 134.84.
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