LONDON – Optimism over upcoming U.S. jobs figures helped stocks and the euro to rally on Friday despite further evidence that the 17-nation eurozone is heading for recession.

Following a run of fairly strong U.S. economic data, investors are increasingly confident that the world’s largest economy is over a soft patch from last summer, helping to offset the global economic impact wrought by Europe’s ongoing debt crisis.

Figures released Friday provided further evidence that the eurozone is heading for a recession. Eurostat, the EU’s statistics office, said retail sales dropped 0.4 percent during the month, in contrast to expectations for an increase of the same amount.

The December data reinforced expectations that the eurozone contracted during the fourth quarter of the year. Eurostat is due to publish its first estimate for the quarter on Feb. 15.

The highlight of the day in the markets will be the monthly U.S. nonfarm payrolls data. Expectations are that the U.S. economy generated around 150,000 jobs during January. Though that is unspectacular for an economy recovering from its worst recession since World War II, the amount of jobs being created is up from levels seen just a few months ago.

“Volatility is likely to remain low until these figures are out, with traders opting to sit and await news rather than heavily commit themselves,” said David Jones, chief market strategist at IG Index.

In Europe, the FTSE 100 index of leading British shares was up 0.5 percent at 5,823 while Germany’s DAX rose 0.4 percent to 6,682. The CAC-40 in France was 0.5 percent higher at 3,394.

Wall Street was also poised for a solid opening, though how it actually performs will hinge on the payrolls data, which are released an hour before the bell. Dow futures and the S&P 500 futures were both up 0.2 percent.

The euro was also garnering support alongside stocks — when appetite for risk is elevated, the euro often finds favour. It was trading 0.3 percent higher at $1.3177 despite the retail sales disappointment.

The focus on the U.S. has proved a welcome diversion for some traders from monitoring the daily grind of Europe’s debt crisis, where much hinges on whether Greece can secure a deal with its private creditors, as is anticipated. A deal is expected soon, though that has been the official line for a few weeks.

Earlier in Asia, the picture was mixed.

Japan’s Nikkei 225 index fell 0.5 percent to close at 8,831.93 but Hong Kong’s Hang Seng ended marginally higher at 20,756.98.

Mainland Chinese shares extended gains fueled by news of fresh support for the farming and small-business sectors, with the benchmark Shanghai Composite Index rising 0.8 percent to 2,330.41 while the Shenzhen Composite Index added 1.5 percent to 878.29.

Oil markets were also relatively subdued. Benchmark oil for March delivery was up 40 cents to $96.76 per barrel in electronic trading on the New York Mercantile Exchange.

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Pamela Sampson in Bangkok contributed to this report.

(Reuters) – The captains of Wall Street have picked a presidential candidate for 2012 and it is Republican Mitt Romney, rather than Democratic President Barack Obama, campaign donation records show.

The records released Tuesday by the Federal Election Commission illustrate a basic shift in political giving at the presidential level by the nation's financial elite.

After a fling with Obama – the charismatic Democrat embraced four years ago during the severe credit crisis that erupted under President George W. Bush – Wall Street is backing Romney in a return to its largely Republican inclinations.

Romney's six largest campaign contribution sources in 2011 were executives, family members and affiliated political action committees of Goldman Sachs, JPMorgan Chase, Morgan Stanley, Credit Suisse, Citigroup and Bank of America, according to the Center for Responsive Politics, a Washington, D.C.-based group that monitors campaign finances.

The center said that the leaders of the six Wall Street giants — which were rescued from ruin by U.S. taxpayers about three years ago — have given $1.8 million to the Romney campaign.

As for Obama, Goldman Sachs was the sole major financial firm ranked among his top 20 contribution sources for 2011, with gifts of just $64,000 compared with $496,000 to Romney.

As they line up behind Romney, banks and investment firms are being joined by a new generation of hedge fund and private equity managers with deep pockets.

They are backing the candidate who comes from their ranks — Romney, a former private equity executive.

"The financial industry has preferred Romney from the beginning when he started his campaign," said Viveca Novak, spokesperson for the center. "He is of their world. They believe he understands them. So, not surprising they would favor him."

Newt Gingrich, Rick Santorum and Ron Paul, the other three Republican presidential contenders, have received very limited support from the financial sector.

FINANCE ON TOP AGAIN

As usual, the finance/insurance/real estate sector is leading all others on the campaign donors list, the center said.

Even after the 2008 financial crisis and the 2010 passage of the Dodd-Frank laws that put new restrictions on the banks and markets, "the power of Wall Street in Washington is unmitigated," said Richard Parker, a public policy lecturer at Harvard University's Kennedy School of Government.

The sector had donated more than $23 million to presidential campaigns as of December 5, the center said. And there are nine months to go before the elections for president and Congress.

Wall Street money, like funds from other walks of life, is pouring in both as traditional campaign donations, which are limited to $2,500 per donor, and as unlimited gifts to Super PACs.

The Super PACs are the legacy of a 2010 Supreme Court decision that unlimited donations by individuals, corporations and unions to groups that operate independently from campaigns.

Working through Super PACs, a few wealthy managers of top hedge funds and private equity firms are pumping money into the political process at unprecedented levels.

Seven of them have given more than $5 million combined to Restore Our Future, a Super PAC that backs Romney. That was more than Obama's Super PAC, called Priorities USA, raised in all of last year. Priorities USA's donor list is topped by labor unions.

Leading supporters of Romney from the financial industry include hedge fund managers Robert Mercer, Julian Robertson, Paul Singer and Chris Shumway, as well as private equity leaders Miguel Fernandez and Steven Webster.

Each has given at least $250,000 to the pro-Romney Super

PAC.

Hedge funds and private equity firms also have been a key source of traditional campaign gifts to Romney.

He has taken in more than $850,000 from executives at firms such as HIG Capital, Blackstone Group, Elliott Management, Citadel Investment and Bain Capital, the firm he co-founded.

NEW PLAYERS ARRIVE

Private equity and hedge fund managers arrived on the political scene in 2005.

That was when Congress began scrutinizing the "carried interest" tax break that lets these managers pay a tax rate on much of their earnings that is much lower than the top U.S. income tax rates.

The first private equity lobbying group was set up in 2006, a month after Democrats won control of both houses of Congress.

More than five years later, the "carried interest" tax break remains in place, although Democrats still say they may seek to eliminate it as part of a plan to trim the federal budget.

Hedge funds and private equity firms are keen to protect the tax break, while Wall Street banks want to roll back portions of Dodd-Frank or, at least, minimize the costs and restrictions it imposes on them as U.S. regulators continue to implement it.

Democrats' threats to close the carried interest loophole, coupled with their strong support for Dodd-Frank regulations and Obama's frequent verbal jabs at the banks, have opened a rift between him and the industry that briefly embraced him three years ago, said American University Professor Leonard Steinhorn.

When Obama came to power, the industry assumed it would have cozy ties with him, as it had with President Bill Clinton in the 1990s.

At first, it did. Then the economy tanked and Obama began to criticize bankers for their role in the credit crisis. Such criticism from a president was a jolt to leading bankers, who were accustomed to flattery from Washington.

"These are people who were totally alienated from Obama when he stopped praising them. Some of them got bitter. These are folks with large egos who like to be stroked," Steinhorn said.

Many bankers have felt uneasy in recent years with the social conservatives who have gained power in the Republican Party, but the bankers likely feel they can relate to Romney, analysts say.

"Romney is one of them," Steinhorn said. "So they can feel comfortable with him."

(Editing by David Lindsey and Cynthia Osterman)

WIESBADEN, Germany (Reuters) – Deutsche Boerse's (DB1Gne.DE) home regulator, the Hessian Minister of Economics, said the German exchange operator has failed to address concerns about the proposed takeover of NYSE Euronext (NYX.N), throwing up another hurdle to the deal.

"We made it clear in discussions in November that we have legal reservations about the deal," Dieter Posch told reporters on Monday.

The ministry said concessions offered by Deutsche Boerse had not addressed its concerns. The ministry, based in Wiesbaden, Germany, has the power to revoke Deutsche Boerse's operating license, a key prerequisite to a successful deal.

The Hessian ministry will give its final verdict on the takeover after antitrust authorities in Brussels have ruled on the deal. A ruling from the European Commission was expected this week. The deal has met intense scrutiny from the European Union.

(Reporting By Andreas Kroner; Writing by Edward Taylor; Editing by Dan Lalor)

NEW YORK (Reuters) – Stock index futures fell on Monday as concerns grew about the state of Europe's finances as Greece and Germany sparred over budget measures for Athens.

Bank stocks led the way lower after a report that Germany was pushing for Greece to give up control over its budget policy to European institutions as part of discussions over a second bailout package.

The issues in Greece added to uncertainty ahead of a Monday summit where European Union leaders will sign off on a permanent rescue fund for the euro zone. The leaders are expected to agree on a balanced budget rule in national legislation.

While sentiment has improved over the euro zone lately, with the S&P 500 up 4.7 percent this month, many investors still view the region with caution as setbacks in solving its sovereign debt issues could hamper international economic growth and erode domestic bank profits.

"The inability of Greece and Germany to agree on a budget deal increases the likelihood that Greece will have to leave the euro zone, an event that would be a shock to the system," said Oliver Pursche, president at Gary Goldberg Financial Services in Suffern, New York.

"In addition, while we could still rally on good news, the recent GDP data was disappointing and earnings have been mixed."

U.S.-listed shares of Barclays Plc (BCS.N) fell 3.2 percent to $13.64, and Deutsche Bank (DB.N) sank 4.8 percent to $42.47. European shares were down 0.7 percent while an index of European banks (.SX7P) lost 2.6 percent.

Standard & Poor's late Friday issued negative ratings on three brokerage firms, including Jefferies Group Inc (JEF.N), citing the impact of a prolonged crisis in Europe.

S&P 500 futures fell 8.7 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 79 points and Nasdaq 100 futures sank 16 points.

Issues in Europe have taken a backseat to the focus on corporate earnings in recent weeks. So far a majority of companies have topped analyst consensus expectations, though by a lower rate than previous quarters.

Gannett Co (GCI.N) and McKesson Corp (MCK.N) are scheduled to report Monday, with Amazon.com Inc (AMZN.O) Exxon Mobil Corp (XOM.N) and Pfizer Inc (PFE.N) on tap for later this week.

Swiss engineering group ABB (ABBN.VX) agreed to buy U.S. electrical components maker Thomas & Betts Corp (TNB.N) for $3.9 billion in cash, sending shares of the company up 22 percent to $70.87 in premarket trading.

Bank of America Corp (BAC.N) is shaking up the leadership of its investment bank as it looks to find its footing in a difficult market environment. The stock fell 2 percent in premarket trading.

Economic indicators on tap for Monday include December personal income and consumption data, as well as a measure of U.S. Midwest manufacturing. Income is seen rising 0.4 percent after a 0.1 percent rise in November, and consumption is forecast to rise 0.1 percent from November.

U.S. stocks trimmed losses to end little changed on Friday, as investors saw dips in the market as an opportunity to buy into what has been a strong first month of 2012.

(Editing by Padraic Cassidy)

PARIS – European leaders’ hard line in negotiations with Greek bondholders drove stock markets lower on Tuesday as investors worried that a deal necessary to cut Athens’ mountain of debt might fall through.

After 10 hours of talks on Monday, the finance ministers of the countries that use the euro announced that Greece would pay less than 4 percent interest on the new bonds creditors will get in a swap meant to cut Greece’s debt by about euro100 billion ($130 billion).

The deal is crucial to Greece’s and the eurozone’s stability since it’s clear there’s no way Athens can ever pay back all that it owes. Banks that hold Greek debt have already been asked to take a 50 percent loss on those investments — and some think even that writedown isn’t big enough.

The negotiations involve a delicate balancing act between getting a deal large enough to ensure that Greece can someday dig out from under its pile of debts but not so harmful to banks that it scares investors off from investing in any eurozone debt.

European leaders have promised Greece is a special case and bondholders won’t ever be asked to take losses again, but there are signs that investors are staying clear of the bonds of other vulnerable countries, like Portugal.

Time is running out for politicians and the banks to get it right — Greece has several billions of euros of debt coming due in March — and stocks dropped Tuesday amid worries they might not.

In France, the CAC-40 fell 0.8 percent to 3,312, while Germany’s DAX dropped 1 percent at 6,370. The FTSE index of leading British shares was down 0.7 percent to 5,740.

Wall Street was also set to open lower. Dow futures fell 0.3 percent at 12,609 and S&P futures dropped 0.4 percent to 1,305.

The euro fell 0.2 percent to $1.3000.

Politicians are also aware that European banks are under tremendous pressure because of the amount of government debt they hold and have seen their stock prices crash and their sources of funding dry up during the crisis. Late Monday, Standard & Poor’s downgraded the credit ratings of two major French banks, Credit Agricole and Societe Generale. They confirmed the rating of a third major bank, BNP Paribas, but the stock prices of all three plummeted Tuesday, underscoring how fragile all financial institutions are.

Compounding these concerns is the poor state of Europe’s economy and worries that the eurozone is slipping back into recession. Even relatively positive results from two economic surveys released Tuesday were not enough to ease those worries.

January’s manufacturing purchasing managers’ composite index rose to 48.7 from 46.9, according to Markit, a financial data company. The services PMI rose to 50.5 from 48.8. Both surveys, which are considered indicators for growth, beat the expectations of analysts, but experts warned they are far from good news.

“While the January purchasing managers’ surveys lift hopes that eurozone activity is stabilizing, they also suggest that the eurozone is far from out of the economic woods,” said Howard Archer, an analyst with IHS Global Insight. “Worrying elements remain in the purchasing managers’ surveys and we suspect that it is still more likely than not that the eurozone will suffer further contraction in the first quarter of 2012 which will put it back into recession.”

Concerns about the state of economy even tempered oil prices, which had been skyrocketing after European leaders announced they would stop buying Iranian oil in an effort to pressure Tehran into resuming talks on its nuclear program.

Benchmark oil fell back 30 cents to $99.28 in electronic trading on the New York Mercantile Exchange.

Earlier in Asia, Japan’s Nikkei 225 stock rose 0.2 percent to 8,785.33 despite the central bank cutting growth forecasts for the fiscal year ending March 2012 and the following year because of a slowdown in overseas demand and the strong yen.

Australia’s S&P/ASX 200 closed little changed at 4,224.20. Indonesia’s benchmark was up 0.1 percent at 3,994.91 and India’s Sensex was 1.5 percent higher at 16,997.35 after the Reserve Bank of India lowered cash reserve requirements for commercial lenders.

WASHINGTON (Reuters) – Securities regulators are due in court on Tuesday to argue that a brokerage industry-backed protection fund should let thousands of victims of Allen Stanford's alleged Ponzi scheme file claims for compensation.

The Securities Investor Protection Corp, which has handled liquidation proceedings for Bernard Madoff's Ponzi scheme and the MF Global failure, has said the 40-year-old Securities Investor Protection law does not apply in the Stanford case.

The unprecedented legal face-off between SIPC and the U.S. Securities and Exchange Commission could have far-reaching consequences for how investors are compensated if their brokerage firm fails.

Stanford, 61, was arrested in 2009 over charges that he ran a $7.2 billion Ponzi scheme linked to certificates of deposit issued by his Antigua-based bank.

Tuesday's hearing in the U.S. District Court for the District of Columbia will come just a day after Stanford's criminal trial gets under way in another federal court in Texas.

The SEC asked the District of Columbia court in December to uphold its authority to order SIPC to help Stanford's victims after negotiations between the two entities had failed. It is unclear how soon Judge Robert Wilkins could rule.

SIPC is standing by its decision not to intervene on behalf of Stanford investors and has created a website to explain its position at http://www.stanford-antigua-sec-lawsuit.com/

It argues that it is limited by law to protecting customers against the loss of missing cash or securities in the custody of failing or insolvent SIPC-member brokerage firms.

While Stanford's Texas-based brokerage was a SIPC member, its offshore bank was not. And in any case, SIPC says it was not chartered by Congress to combat fraud or guarantee an investment's value.

"I think as a general policy matter, SIPC probably should win," said Seton Hall University School of Law professor Stephen Lubben. "If they don't, we are turning this insurance fund… into basically fraud protection across the board in all kinds of investments, which is going to be a lot more expensive."

Initially, some staff at the SEC seemed to agree with SIPC's view.

Former SEC General Counsel David Becker is quoted in a report released in September as saying "the law is the law" and that Stanford victims did not qualify.

Then in June, just one day after Senator David Vitter threatened to block the nominations of two SEC commissioners until the agency made a decision on Stanford claims, it announced that it was siding with the victims.

In a 195-page document, the SEC said that for SIPC to conclude that these customers did not actually deposit cash with Stanford Group "would elevate form over substance by honoring a corporate structure designed by Stanford in order to perpetrate an egregious fraud."

The timing of the SEC's announcement has raised some eyebrows at SIPC.

But Angela Shaw, the founder and director of the Stanford Victims Coalition, said the SEC's decision was not based on politics. It came, she said, after she turned over thousands of documents that helped convince the agency that investor money never went to the bank, but was instead spent by the brokerage.

"We have a broker-dealer that was a SIPC member that stole customers' funds," she said. "SIPC covers theft of investor funds when they are stolen by the broker-dealer, and the SEC has not alleged that this foreign bank stole our money."

TECHNICAL ARGUMENTS

It is not clear whether Tuesday's hearing will explore the merits of the arguments for or against SIPC coverage for Stanford investors.

The SEC, which has oversight authority over SIPC, plans to tell the judge that its position is "not subject to judicial review." It wants the court to simply weigh whether it has met the requirements to compel SIPC to launch a liquidation proceeding.

Stephen Harbeck, president and CEO of SIPC, rejects that argument entirely.

"I think it is fair to say that the SEC's position is as follows: The court may not look at the facts, the court may not look at the law, SIPC may not present any counter-argument, there is no appeal, and the court must do as we say," he said. "I am unaware of any jurisprudence that allows that."

SEC spokesman John Nester said Harbeck "apparently misunderstands our position, which is based on the facts and the law."

(Reporting By Sarah N. Lynch; Editing by Lisa Von Ahn)

LONDON (Reuters) – Concern about the appetite for euro zone sovereign debt pushed European stocks lower and hit the single currency on Thursday, with the first French bond auction of 2012 set to test how much progress policymakers have made in easing tensions.

The price France has to pay to sell 7 to 8 billion euros of longer-term bonds will measure how much relief markets have taken from the EU leaders' December plan for resolving the crisis and the near half-trillion euros pumped into the region's banks by the European Central Bank.

Markets have been bracing for France to lose its current AAA rating after ratings agency Standard & Poor's warned in early December of a mass downgrade due to concerns about the bloc's two-year old debt crisis.

"Whilst France currently clings to its AAA credit rating at the moment, the chorus of warnings from credit agencies about imminent downgrades could deter investors," Capital Spreads trader Jonathan Sudaria said.

France is seen at a greater risk of contagion from the euro zone debt crisis than Germany, but the real test comes next week with Spain and Italy, the two big economies seen as most at risk from the crisis that has already dragged down Greece, Ireland and Portugal, due to issue bonds.

Germany saw subdued demand at its first auction of the year on Wednesday.

The euro eased 0.1 percent to around $1.2930 on Thursday, nearing a 2011 low of around $1.2856 hit on December 29.

A break below that would take it back to levels not seen since September 2010.

"Euro zone debt worries persist and the euro is basically on a declining trend, while undergoing short-term swings depending on the degree of risks," said Tomoko Fujii, FX strategist at Bank of America Merrill Lynch in Tokyo.

The FTSEurofirst 300 (.FTEU3) index of top European shares fell in early trade, down 0.3 percent at 1018.03 points after hitting a five-month high on Tuesday.

European shares fell on Wednesday after Italy's UniCredit SpA (CRDI.MI) launched a 7.5 billion euro ($9.68 billion) rights issue at a huge discount, reflecting the difficulty some European lenders are facing in raising capital to repair their weakened balance sheet.

The MSCI world equity index (.MIWD00000PUS) edged down 0.4 percent after weakness in Asian stock markets earlier.

Brent crude moved over $114 barrel on Thursday as fears of Iranian supply disruption after the European Union agreed to cut off oil imports from the No. 2 OPEC producer.

Brent crude was up about 0.4 percent $114.16, after advancing nearly 6 percent in the past two sessions to close at the highest since November 11 on Wednesday.

(Additional reporting by Chikako Mogi and Blaise Robinson)

Stocks fell Thursday as renewed concern about Europe outweighed positive jobs news in the U.S. The euro fell to a 15-month low against the dollar and stocks fell sharply in Italy and Spain.

The Dow Jones industrial average fell 122 points, or 1 percent, to 12,297 in morning trading. The S&P 500 index fell 11 points to 1,266, and the Nasdaq fell 13 points to 2,635.

Stocks were down sharply in European countries with the biggest debt problems. Indexes in Italy, Greece and Spain fell more than 2 percent. Markets in the bigger, more stable economies of Britain, Germany and France fell slightly. The euro dropped to $1.28, its lowest level since September 2010.

Barnes & Noble plunged 25 percent after the book store chain lowered its profit forecast and said it might separate its electronic book and reader business from its bricks-and-mortar bookstores. The company’s Nook reader has been positioned as a competitor to Amazon Inc.’s hugely successful Kindle and Apple Inc.’s iPad.

In the U.S., the Labor Department reported another drop in the number of people seeking unemployment benefits. Payroll processor ADP said private employers added 325,000 jobs last month. The two reports signal further, though not dramatic, improvement in the U.S. jobs market.

Investors shrugged off the U.S. jobs news and looked abroad, worried about Europe’s banks. On Wednesday, Italy’s largest bank, Unicredit, said it was selling new stock at a steep discount to raise $9.7 billion to meet new requirements for banks to keep thicker financial cushions against losses. UniCredit fell 10 percent Thursday.

In U.S. corporate news:

• Constellation Brands Inc. fell 4.7 percent after the beverage maker said its third-quarter income dropped 25 percent on weaker wine and beer sales in North America. The company makes Robert Mondavi wine and Svedka vodka.

• Tesoro Corp. plunged 7 percent. The Texas oil refiner said it would report a loss for the final three months of 2011. Tesoro said rising prices for crude oil drove up refining costs at the same time gas prices were falling.

Earlier in Asia, Japan’s Nikkei 225 index fell 0.8 percent. Mainland China’s benchmark Shanghai Composite Index lost 1 percent to its lowest level in almost three years.

LONDON – The euro fell to a fresh 15-month low against the dollar Thursday while stock markets continued to give up some of their early-year gains as European debt concerns offset mounting optimism over the state of the U.S. economy.

For a second day running, the concern in the markets has centered on the state of Europe’s banks following UniCredit’s announcement Wednesday that it was selling new shares at a large 69 percent discount to Tuesday’s closing price.

UniCredit is trying to raise euro7.5 billion ($9.7 billion) to meet new European requirements for banks to thicken their financial cushions against possible losses. UniCredit’s share price was down another 10 percent Thursday, following a near 15 percent decline the day before.

Italy, the recent focus of the debt crisis, must borrow to cover euro53 billion ($69 billion) in expiring debt in the first quarter alone in debt auctions beginning Jan. 13. That will test whether the government of new Prime Minister Mario Monti is making progress in regaining market confidence through budget cuts and efforts to improve weak economic growth.

Banks are an integral part of the debt crisis because they hold government bonds. A default or steep fall in the value of government bonds could inflict heavy losses on banks and choke off credit to the European economy. That’s why regulatory authorities want Europe’s banks to raise their buffers by euro115 billion (149 billion) over the next few months. The worry in the markets is that banks will have to offer sharp discounts.

The economic slowdown will also keep pressure on lenders in Europe. Spain’s economy minister told the Financial Times he expects the country’s banks to have to set aside anoter euro50 billion in provisions to cover the costs of bad property loans. The comments caused Spanish banks stocks to slide and contributed to losses in other countries. France’s Societe Generale SA was down 4 percent, for example.

“European bank stocks are under pressure and UniCredit shares were suspended after a 14 percent fall yesterday was compounded by an 8 percent fall today,” said Adam Cole, an analyst at RBC Capital Markets. “The latter was the immediate catalyst for euro weakness and well-received European debt supply did little to offset the damage.”

France became the latest euro country to sell off a large chunk of bonds in a relatively troublefree manner, though its borrowing rates edged up and demand slipped from earlier auctions. France’s bond markets are a particular focus for investors because credit ratings agencies have threatened to cut the country’s cherished triple-A rating.

In total, France sold euro7.96 billion ($10.31 billion)of its bonds at affordable rates. Of the issues on offer, most interest centered on the euro4 billion in ten-year notes, for which the results were mixed. It had to pay a rate of 3.29 percent, up from December’s equivalent rate of 3.18 percent, and demand was lackluster — the bid to cover ratio, a gauge of investor demand, was only 1.643 as against 3.046 last time.

Germany had also seen a drop in demand for its bond issues this week, with demand for euro4.06 billion of its ten-year bonds issued on Wednesday only barely covering what was on offer.

As investors’ risk appetite waned, following a surprisingly buoyant start to the year, the euro took a battering. Weaker than expected eurozone industrial orders in October — up just 1.8 percent after September’s dramatic 7.8 percent decline — helped send the euro down to $1.2832, its lowest level since September 2010.

European stocks likewise fell, though most indexes remained higher for the year so far. Germany’s DAX was down 0.8 percent at 6,062 while the CAC-40 fell 1.1 percent to 3,157. The FTSE 100 index of leading British shares was 0.7 percent lower at 5,629.

Italy’s FTSE MIB underperformed, trading 1.9 percent, as it continued to suffer the fallout from UniCredit’s pricing of its rights issue.

Wall Street was poised for a fairly weak opening, too — Dow futures were down 0.6 percent at 12,280 while the broader Standard & Poor’s 500 futures fell 0.8 percent to 1,263.

A raft of U.S. economic data later have the potential to shift sentiment, especially if the recent strong run continues. Key releases later include the Institute for Supply Management’s monthly survey of the services sector as well as indicators on the pace of hiring in the private sector.

The latter may affect market expectations for Friday’s closely-watched nonfarm payrolls data for December. The figures often set the market tone for a week or two after their release. The expectation is that the U.S. economy generated around 150,000 jobs during December.

That would represent a further steady, if unspectacular, improvement in the U.S. jobs market.

Earlier in Asia, Japan’s Nikkei 225 index fell 0.8 percent to close at 8,488.71. South Korea’s Kospi index lost 0.1 percent at 1,863.74, while Hong Kong’s Hang Seng Index rose 0.5 percent to 18,813.41. Benchmarks in Singapore and Taiwan were also higher.

Mainland China’s benchmark Shanghai Composite Index lost 1 percent to 2,148.45, its lowest level in almost three years. The Shenzhen Composite Index lost 3.5 percent to 813.99. More than 100 companies plunged to the daily limit of 10 percent.

Oil prices tracked equities lower even though the EU countries are beginning the process of trying to thrash out an agreement on banning the purchase of Iranian oil in the hope of choking off funding for the country’s nuclear program — benchmark oil for February delivery fell 76 cents to $102.46 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 26 cents to end at $103.22 per barrel on the Nymex on Wednesday.

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Pamela Sampson in Bangkok contributed to this report.