European shares dropped and the euro fell back below $1.30 on Wednesday as markets refocused on eurozone debt concerns after a brief New Year bounce, traders said.
Frankfurt’s DAX 30 slid 0.83 percent to 6,117.79 points and in Paris the CAC 40 shed 0.75 percent to 3,221.11 points in midday deals, as some disappointing eurozone data offset a well-received German bond auction.
London’s benchmark FTSE 100 index dipped 0.04 percent to 5,697.37 points, with losses limited by gains to the heavyweight energy sector, traders said.
Madrid though slumped 1.85 percent and Milan retreated 1.48 percent. “The whiff of optimism from yesterday’s session dissipated today, as the concerns over eurozone debt came to the foreground again,” said trader Anita Paluch at Gekko Global Markets.
The euro slid to $1.2983 from $1.3051 late in New York on Tuesday.
Germany meanwhile raised 4.0 billion euros ($4.2 billion) on Wednesday with a sale of it 10-year bonds, considered the gold standard of eurozone debt.
Germany received 5.14 billion euros’ worth of bids for its offering of 5.0 billion euros.
The average yield on the 4.0 billion euros in bonds sold was 1.93 percent, up marginally from the 1.905 percent on the secondary market on Tuesday evening.
In November, a similar auction of 10-year debt attracted minimal demand, sending markets into tailspin as investors feared that even Germany was losing its safe-haven status due to the eurozone crisis.
Elsewhere, a key survey showed that private sector activity in the eurozone shrunk for the fourth consecutive month in December.
While output increased in Germany and stabilised in France, it slumped sharply in Italy and Spain, two nations under intense pressure over their high debts, according to the survey compiled by Markit research firm.
The purchasing managers’ index (PMI), a survey of 4,500 manufacturing and services firms, stood at 48.3 points in December — in line with analysts’ expectations and better than a previous estimate of 47.9 points.
It had fallen to 47 in November. Any score below 50 indicates contraction.
“The uplift in the eurozone PMI in December does little to dispel fears of the region sliding back into recession,” said Markit chief economist Chris Williamson.
In Asia meanwhile, Tokyo shares rose on their first day of trading in 2012, as investors took a strong lead from Wall Street overnight, dealers said.
Tokyo gained 1.92 percent to 8,560.11 points and Sydney shot up 2.11 percent to 4,187.8. But Seoul gave up 0.49 percent.
Sentiment had been given a lift by manufacturing data from the United States. The US Institute for Supply Management said Tuesday its manufacturing index hit 53.9 percent in December, an increase of 1.2 points from November and the fastest rate in six months, surpassing expectations.
US stocks surged in response, with the Dow up 1.47 percent, the tech-rich Nasdaq 1.67 percent higher and the S&P 500 rising 1.55 percent.