European shares mostly drop before EU summit

European stock markets mostly fell on Thursday and the euro dipped versus the dollar before a key EU summit and amid mixed economic news for debt-riddled Spain as it faces heightened bailout speculation. In late morning deals, London\'s benchmark FTSE 100 index of top companies climbed just 0.04 percent to 5,913.60 points, after news that British retail sales rose in September. On the downside, Frankfurt\'s DAX 30 fell 0.25 percent to 7,413.26 points, the Paris CAC 40 slid 0.08 percent to 3,525.37 points and Madrid\'s IBEX 35 shed 0.47 percent to 8,090.70. Asian equity markets had closed higher on Thursday as dealers welcomed news that China\'s economy grew in line with forecasts, while confidence was also lifted by more upbeat US data. \"Improving sentiment towards the global economy supported risk markets ahead of (the) EU summit,\" said RIA Capital Markets analyst Nick Stamenkovic. \"Today\'s EU summit will discuss a broad range of subjects including banking union, direct banking sector recapitalisation, stricter fiscal oversight and a centralised euro area budget. \"Greece and Spain will also be discussed,\" said Stamenkovic, who doubted that \"any substantive policy measures\" would be announced. Later on Thursday, EU leaders gather in Brussels for a summit on strengthening the bloc\'s shaky foundations as Spain appears set finally to ask for financial aid, easing a key eurozone pressure point. With Spain reportedly edging closer to asking for what diplomats describe as a precautionary credit line, the 27 European Union states will meet from 5:45 pm (1545 GMT) for two days of talks free from the worst fears of previous debt crisis summits. The meeting is the first of three before Christmas aiming to end the year with a deal on a stronger economic and monetary union. With all eyes on the eurozone, the European single currency eased to $1.3112 in foreign exchange trading on Thursday, from $1.3120 late in New York on Wednesday. Gold prices decreased to $1,747.50 an ounce on the London Bullion Market from $1,749 an ounce. In an upbeat development before the EU summit, the Bank of Spain announced that Spain\'s borrowing costs tumbled in a major bond auction as Madrid scrambled to decide whether to snatch a eurozone financial lifeline. The Spanish Treasury took advantage of the lower rates to raise an above-target 4.61 billion euros ($6.0 billion) in the sale of three-, four- and benchmark 10-year government bonds. Analysts said that the successful auction suggested that the European Central Bank could soon buy up Spanish sovereign bonds under the strict conditions of its new Outright Monetary Transactions (OMT) programme. \"Decent results of the Spanish auction suggest to me that investors are assuming the OMT will be triggered sooner or later,\" Rabobank senior currency strategist Jane Foley told AFP. At the same time, however, the Bank of Spain revealed fresh data showing that bad loans at Spanish banks surged to a new record high in August. The value of loans at risk of not being repaid surged to 178.6 billion euros ($234 billion) in August or 10.51 percent of the total, up from 169.3 billion euros, or 9.42 percent of the total, the previous month. Asian stock markets meanwhile advanced on Thursday after China said its economy grew 7.4 percent in the third quarter to the end of September. The figure showed the Chinese economy\'s weakest performance since the global financial crisis but was in line with market expectations, while other economic data pointed to a possible bottoming out of the economy. Hong Kong stocks added 0.48 percent, Shanghai rose 1.24 percent and Sydney gained 0.69 percent, while Tokyo soared 2.00 percent higher as a weakening yen boosted exporters, dealers said.