European stock markets closed mostly lower on Monday and the euro slipped after the G20 called on the eurozone to strengthen its firewall against potential future financial crises.
Dealers said the weekend meeting of finance ministers from the G20 of developed and developing countries took centre stage after they urged Europe to do more before the International Monetary Fund could be expected to commit itself further to helping resolve the eurozone debt crisis.
"Euro area countries will reassess the strength of their support facilities in March," a G20 statement said after the meeting in Mexico City.
"This will provide an essential input in our ongoing consideration to mobilise resources to the IMF."
At a two-day summit in Brussels starting on Thursday, EU leaders will debate whether to combine their current firewall system with a permanent mechanism due to come into effect in July to give the debt-wracked 17-nation bloc total rescue funds of 750 billion euros ($1 trillion).
To get even more firepower, the eurozone has called on countries outside the bloc to bolster the IMF's resources so it could act as an additional backstop.
Higher oil prices also hurt sentiment but the markets managed to come off their lows in the afternoon as Wall Street picked up after a weak start on positive US housing sales figures.
In London the benchmark FTSE 100 index of leading companies closed down 0.33 per cent at 5,915.55 points.
In Frankfurt the DAX 30 slipped 0.22 per cent to 6,849.60 points and in Paris the CAC 40 fell 0.74 per cent to 3,441.45 points.
The European single currency dropped back through $US1.34 at one stage but then it, too, picked up to trade at $US1.3412, compared with $US1.3451 on Friday.
In New York, US stocks fell at the opening, hit by the G20 statement and concerns recent gains in oil prices could undercut the US recovery but then moved ahead as the day progressed.
Dealers said the fact that investors bought in on the dip suggested underlying sentiment is positive and were looking to take positions.
The blue-chip Dow Jones Industrial Average was up 0.14 per cent and the tech-rich Nasdaq Composite gained 0.21 per cent in midday trading.
Data showing that pending home sales rebounded two per cent in January, twice as much as expected, helped explain the turnaround, dealers said.
Stocks retreated "as investors reduced exposures in heavyweight financials and mining stocks on a somewhat ominous statement from the G20 meeting", said Joshua Raymond, chief market strategist at City Index traders in London.
At the same time, fears of a eurozone credit squeeze continued in focus as data on Monday showed bank lending to the private sector remained fragile despite an unprecedented injection of liquidity.
The European Central Bank said growth in loans to the private sector picked up only fractionally to just 1.1 per cent in January from 1.0 per cent in December.
In company news, HSBC shares slumped some 3.7 per cent, hit by profit-taking after the giant London-headquartered bank said net profits jumped 28 per cent to $US16.8 billion in 2011.
"Banking stocks are weighing a little on sentiment, despite good HSBC results," said IG Index analyst David Jones.
In Asia on Monday, Japanese shares hit a near-seven-month high, spurred by a weakening yen but later slipped back to show a loss of 0.14 per cent.
Hong Kong fell 0.88 per cent while Shanghai gained 0.30 per cent.
AFP