Premarket: Waiting for Merkozy

European stocks dipped into the red as the leaders of France and Germany met to discuss ways to strengthen the euro zone.

The FTSE 100 dipped 0.2 per cent, the CAC 40 was close to flat, and Germany's DAX inched 0.3 per cent lower. Investors preferred the safety of German government debt -- Monday marked the first ever negative auction yield on six-month German government debt, with people paying 0.0122 per cent to lend money to Europe's largest economy.

U.S. stock futures were little changed.

Along with ways to boost employment and growth in the euro zone, Chancellor Angela Merkel and President Nicolas Sarkozy may also talk about a financial transaction tax, which Britain opposes.

Germany's economy keeps showing it can withstand the crisis, with a rise in exports reported on Monday and the labour market thriving. But employment is a pressing issue for Mr. Sarkozy, who faces an election in less than four months, with French jobless claims at their highest level in 12 years.

The euro recovered some ground, trading 0.8 per cent higher at $1.2780 (U.S.).

Monday's meeting comes ahead of new Italian Premier Mario Monti's first visit to Berlin Wednesday. Italian 10-year paper yielded around 7.13 per cent, firmly above the 7 per cent level widely seen as unsustainable. Spanish equivalent bonds were at 5.74 per cent.

Chinese shares surged 1.5 per cent after Premier Wen Jiabao promised to channel lending to entrepreneurs who have been battered by weak global demand.

Gold steadied, trading at $1,620.10 an ounce.

Copper slipped around 0.5 per cent to $7,540 a tonne.

U.S. crude declined 0.4 per cent to $101.13 a barrel.

The Canadian dollar traded at 97.20 U.S. cents.