European stocks mixed, euro rebounds before Berlin talks

European stock markets were narrowly mixed Monday and the euro rebounded from fresh 16-month lows against the dollar as traders awaited Franco-German talks on the eurozone debt crisis. German Chancellor Angela Merkel hosts French President Nicolas Sarkozy on Monday, kicking off a week of high-level talks to lay the groundwork for a crunch EU summit on taming the eurozone crisis. In European midday trade, Frankfurt\'s DAX 30 index of leading stocks dipped 0.18 percent to 6,047.03 points. The Paris CAC 40 gained 0.17 percent to 3,142.81 points and London\'s FTSE 100 was flat at 5,649.90 points. The euro struck a 16-month low at $1.2666 in Asian trading hours before recovering to $1.2772, which compared with $1.2717 in New York on Friday. The European single currency slumped under $1.27 for the first time since September 2010 on Friday as upbeat US payrolls data contrasted sharply with dire economic numbers in the crisis-hit eurozone, dealers said. \"The euro has had a good start to the European session (on Monday) in a very important week for Europe,\" beginning with the talks between Merkel and Sarkozy, said Kathleen Brooks, a research director at Forex.com. The duo at the heart of European efforts to stem the debt-driven turmoil threatening the single currency gather in Berlin for their first monthly tete-a-tete in what is certain to be a rocky year. \"In the past markets have usually led up to these meetings in buoyant mood that a solution to the debt crisis could be found,\" said Brooks. \"However, after rounds and rounds of disappointment the markets seem to have learned to temper their expectations and markets seem to hold out little hope of \'definitive\' action in the near-term.\" She added: \"This meeting is a prelude to the January 30 EU leaders summit and the pressure is building. Europe\'s bond yields (borrowing costs) have deteriorated yet again. \"Italian 10-year bond yields are uncomfortably high at 7.17 percent, while Spain\'s 10-year jumped by the most last week in 17-years and yields are currently above 5.7 percent.\" Yields on eurozone sovereign debt are rocketing as investors demand top returns for lending money to the bloc\'s most indebted countries such as Greece and Italy. Asian stock markets meanwhile closed mixed on Monday as worries over the eurozone debt crisis were tempered by better-than-expected US jobs data. South Korea closed down 0.90 percent and Hong Kong closed up 1.47 percent. Financial markets in Japan were closed on Monday for a public holiday. \"As expected, the black clouds from Europe stopped any US sunshine breaking through,\" Justin Harper, head of research at IG Markets, said in a note to clients. \"This pessimism is being played out across equity and currency markets and is likely to be 2012\'s recurrent theme.\" Concerns about Spain and Italy are driving fears they could be next to need bailouts from the European Union and International Monetary Fund, after Greece, Ireland and Portugal. The negative feeling stood in contrast to Friday\'s jobs data from the United States, where the unemployment rate dropped to 8.5 percent in December, the lowest level in nearly three years. Wall Street closed mixed ahead of the weekend with the Dow Jones Industrial Average losing 0.45 percent, the broad-based S&P 500 slipping 0.25 percent and the tech-heavy Nasdaq finishing up 0.16 percent.