Markets and euro suffer as investors lose patience with Europe's leaders - The Telegraph

The euro plunged through the psychologically-important $1.30 level for the first time in almost a year, raising fears of another crisis less than a week after the last "make-or-break" European Union leaders' summit.

Equity, bond and commodity markets were rattled while the tensions were reflected at an Italian bond auction. Rome, where Mario Monti has already been forced to water down his "Save Italy" measures, had to offer 6.47pc yield to raise €3bn of five-year bonds - much higher than 6.29pc it paid two weeks ago.

Angus Campbell, head of sales at Capital Spreads, said: "Political leaders and central bankers seem to have got stuck in a quagmire of indecision so as a result financial markets gave up on their lack of resolve today...the prospect of a full-scale European sovereign debt melt down in the near future became more of a reality."

The Stoxx Europe 600 index fell 2.1pc, the French CAC slumped 3.3pc and the German DAX was off 1.7pc. In London the FTSE 100 fell 2.3pc. Gold plunged below €1,600 to its lowest level since July. Sterling hit a nine-month high against the euro.

Strong demand for safe havens saw banks' dollar borrowing triple at the European Central Bank's (ECB) weekly loan offering. A total of 12 banks used the ECB's seven-day dollar swap line, borrowing $5.1bn - three times the $1.6bn level last week.