Investors jittery as euro debt summit approaches
By Jeremy Gaunt, European Investment Correspondent
World stocks were flat, but European shares dipped and the euro was slightly weaker.
EU leaders are to meet on Wednesday with tentative plans in place for Greece's debt to be reduced, European banks to be recapitalized and the euro zone's EFSF rescue fund to be increased to provide partial insurance for sovereign bonds.
But the agreements and how far they go remain under discussion, causing some nerves on financial markets.
Adding to the uncertainty, German lawmakers secured a full parliamentary vote on any euro zone crisis measures negotiated, a move that risks delaying Europe's response to its two-year debt problems.
"Whilst official comments have stated that "good progress" is being made, behind the scenes things look a little shakier," Capital Spreads dealer Jonathan Sudaria said.
Investors are also becoming concerned about the impact of the crisis on overall European growth, although news that German consumer morale unexpectedly rose going into November will have provided some succor.
MSCI's all-country world stock index was flat -- down around 7 percent for the year to date -- with its emerging market index <.MSCIEF> up 0.6 percent on the day.
But the pan-European FTSEurofirst 300 <.FTEU3> was down a quarter of a percent.
Earlier, Japan's Nikkei <.N225> closed down 0.9 percent as the domestic corporate earnings season began.
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The euro edged lower but still held near a six-week high against the dollar hit the previous day, supported by market expectations for European leaders to come up with an agreement.
The yen also hovered just shy of a record high against the dollar, leaving investors nervous about possible intervention by the Japanese authorities to stem the currency's rise.
The euro was at $1.3910.
German Bund futures nudged up on the uncertainty.
Traders and strategists said they expected the bond market to remain volatile going into Wednesday's summit, with thin volumes adding to the potential for sharp market moves.
(Additional reporting by Simon Jessop, Jessica Mortimer and Emelia Sithome-Matarise; editing by Anna Willard)