European stocks, euro slide amid eurozone strains

Europe\'s main stock markets and the euro slid against the dollar on Monday, weighed down by acute concern about the debt crisis despite a power-sharing deal aimed at keeping Greece in the eurozone. As the London, Frankfurt and Paris stock markets tumbled in early deals, Athens\' main index shot higher after Greece\'s top politicians clinched a dramatic power-sharing deal to pull the country from the brink of bankruptcy, and also raising the chances of a general election early next year. But Italian borrowing rates rose to record high levels and into the danger zone which drove Ireland and Portugal into EU-IMF bailouts. The euro fell to $1.3710 from $1.3788 on Friday. \"Ongoing developments in the eurozone sovereign debt crisis continue to remain the main driver of financial market direction,\" said Lee Hardman, an economist at The Bank of Tokyo-Mitsubishi UFJ in London. \"Greece\'s problems remain largely unchanged with the country still insolvent, and exacerbating financial market instability within the eurozone. \"The outcome from the G20 leaders summit also proved disappointing at a time when the eurozone sovereign debt crisis continues to escalate rapidly increasing downside risks to global growth,\" he added. In early deals, London\'s FTSE 100 index shed 1.57 percent to 5,440.55 points, Frankfurt\'s DAX 30 lost 1.77 percent to 5,859.59 points and in Paris the CAC 40 dropped 2.04 percent to 3,059.76. Milan declined 1.76 percent, Madrid plunged 2.89 percent while Athens surged 2.68 percent. In Tokyo, stocks fell 0.39 percent, and Sydney closed 0.18 percent lower, while Seoul fell 0.48 percent. Hong Kong slipped 0.83 percent. Markets are deeply concerned that the debt crisis could spread to Italy -- a nation which like Greece is also struggling with a huge deficit. The yield on Italian 10-year debt bonds rose to a record 6.596 percent on Monday, reflecting acute market pressure on the Italian government over its public finances. Hideyuki Ishiguro, supervisor of investment strategy at Okasan Securities, said that with eurozone finance ministers set to meet later in the day \"the focus will likely shift to rising Italian bond yields\". Officials are also expected to discuss whether to release an eight billion euro ($11 billion) slice of bailout cash that Greece\'s finance minister has said was crucial to keep the nation afloat. Greek political chiefs on Monday sought to put the finishing touches to a unity government and appoint a new leader after agreeing to form an emergency government before elections in February. Outgoing Prime Minister George Papandreou and the head of the main opposition party, conservative Antonis Samaras, were to continue negotiations Monday on a new interim leader tasked with implementing a vital EU bailout deal worth 100 billion euros. The historic power-sharing deal was reached in dramatic late-night talks Sunday after Papandreou agreed to quit. The embattled premier drew widespread criticism over plans to put the bailout package to a national vote. The move stunned fellow European leaders, sent global markets into a tailspin last week and earned him a humiliating dressing-down at a G20 summit in France. Papandreou hastily retracted the proposal. Leaders of the world\'s top 20 economic powers had on Friday pushed the European Union into acting to stop Italy following Greece into a debt crisis, but failed to come up with new funds to boost the IMF war chest.