European stocks, euro slide as EU summit opens

European stock markets and the euro slid on Thursday with traders waiting to see if EU leaders will deliver concrete steps to tackle the eurozone\'s spreading debt crisis. London\'s benchmark FTSE 100 index shed 0.56 percent to 5,493.06 points, with bank stocks hurt by an interest rate fixing scandal. In Frankfurt, the DAX 30 tumbled 1.27 percent to 6,149.91 points and in Paris the CAC 40 slid 0.37 percent to 3,051.68 points. Milan rose by 0.67 percent, however, and Madrid gained 0.82 percent as lawmakers passed a 2012 austerity budget. In foreign exchange deals, the euro retreated to $1.2435 from late Wednesday\'s $1.2467 in New York. The dollar slid against the yen, buying 79.33 of the Japanese unit compared to 79.71 at Wednesday\'s close in New York. US stocks also headed lower, shrugging off a Supreme Court ruling upholding President Barack Obama\'s health care reform, focusing instead on banking problems. \"European politicians have done a fantastic job of lowering expectations for the EU summit that begins today, which means that even the smallest \'breakthrough\' may cause a short-term relief rally\" across financial markets, said Kathleen Brooks, research director at Forex.com trading group. EU leaders began debate on a so-called \"a big leap forward\" for increased integration and to save the euro at a two-day summit in Brussels, but splits might scupper efforts to ring fence the single currency. The 27 EU heads of state and government began their talks with the world anxiously awaiting a grand plan to save the single currency from a collapse with unfathomable global repercussions. Cyprus and Spain have joined the earlier victims of contagion -- Greece, Portugal and Ireland -- in requesting aid. With Italy, the eurozone\'s third economy, also threatened, the EU is under pressure from world leaders to deliver a convincing plan to prevent a collapse of the single currency, which would have unfathomable global repercussions. \"Financial markets are hoping that EU leaders will be able to come to some form of agreement about steps towards some form of banking union and a deposit guarantee scheme, as well as agree to measures to help lower borrowing costs in Spain and Italy,\" said Michael Hewson, senior analyst at CMC Markets trading group. \"Expectations are low so the potential for a positive surprise is there; unfortunately it seems more likely that nothing tangible is likely to be agreed given that EU officials are already playing down expectations.\" Banking shares were hit after Barclays became to the first to be fined in a probe into rigging of key interest rates at which many businesses and consumers worldwide borrow. Shares in Barclays plunged by as much as 17 percent, wiping billions of pounds from its value, as Prime Minister David Cameron and Finance Minister George Osborne said the bank had \"serious questions\" to answer. British and US authorities are probing several other banks which may have also acted improperly in the setting of the inter-bank Libor and Euribor rates. \"This has hit share prices hard as investors fear further regulatory burdens on the beleaguered sector,\" said Hewson. Barclays shares ended the day down 15.62 percent to 165.43 pence. Its British competitors RBS saw its shares fall 12.66 percent, Lloyds 4.42 percent and HSBC 2.81 percent. US stocks shrugged of the Supreme Court ruling upholding President Barack Obama\'s health care reform, taking their cue instead on banking problems. In midday trade, the Dow Jones Industrial Average was down 1.03 percent to 12,496.94 points. The S&P 500 index dropped 1.01 percent to 1,318.41 points, and the tech-rich Nasdaq lost 1.36 percent to 2,836.30 points. JPMorgan shares plunged over three percent in early trade on a report that its losses on a mismanaged derivatives trading operation could hit $9 billion, later recovering some of that to stand down 1.45 percent. News Corp shares initially dipped 0.8 percent after it confirmed it would split into two separate businesses, but later trimmed the loss to 0.58 percent. Asian stock markets mostly closed higher but gains were capped by low expectations of a breakthrough at the EU summit.