World stocks, euro plunge on eurozone debt contagion

LONDON — World stock markets dived and the euro hit a four-month low point against the dollar on Tuesday as eurozone debt contagion spread, sending investors for safety, analysts said.The Milan stock market however pulled back dramatically from sharp early losses to trade almost flat in midday trade, as Italy's finance minister quit talks with his EU counterparts to work on his country's austerity plans.The London stock market shed 1.51 percent, Frankfurt slumped 2.06 percent, while the main Paris index plunged 2.36 percent before a technical fault caused it to stop working.Madrid dropped 1.73 percent approaching the half-way stage and after Europe's main stock markets had been under strong pressure from the debt crisis on Monday.Wall Street stocks slumped overnight, also hit by a weak US jobs market, while markets finished sharply lower across Asia on Tuesday.The European single currency tumbled to a four-month low level of $1.3837 in London foreign exchange deals before pulling back to $1.3944.Eurozone members were holding further debt talks on Tuesday, one day after agreeing to strengthen a multi-billion-dollar fund to tackle Europe's debt contagion.But investors were increasingly concerned that political leaders and bankers gathered in Brussels were unable to agree on how to avert an outright default by Greece.Analysts had long forewarned that the Greek crisis could spread to heavily-indebted Italy and Spain -- the third and fourth-biggest economies in the European Union."I am returning to Rome to complete my austerity plan," Italy's finance minister Giulio Tremonti told journalists in Brussels on Tuesday as finance ministers from the 27-nation EU discussed ways to stem a debt contagion crisis.Lee Hardman, an economist at The Bank of Tokyo-Mitsubishi UFJ, noted: "It has long been assumed that as long as Greece, Portugal, and Ireland remained the only eurozone countries to fall into trouble, the situation was manageable with spill-over effects likely to prove negligible."However, the sharp collapse in

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