World Stocks Fall on Doubts over EU Plans

World stocks fell toward the previous week's 14-month low Monday and the euro hit a 10-year low against the yen as doubts grew over how effective Europe's latest steps would be in containing the sovereign debt crisis.

European policymakers began working on new ways to stop fallout from Greece's near-default, focusing on ways to beef up their existing 440-billion-euro rescue fund.

But deep differences remained over whether the European Central Bank should commit more of its massive resources to shoring up Europe's banks and help struggling euro zone member countries.

Concerns over the potential effect from Greece's possible default, especially on the banking sector, and worries over a U.S. economic slowdown have been weighing on world stocks, fanning safety-seeking flows into top-rated government bonds.

Overall it's still an inconclusive situation -- no tangible action plan coming out of the weekend gathering so the net result will still be risk aversion, said Rainer Guntermann, strategist at Commerzbank.

The MSCI world equity index fell 1.1 percent, having already hit its lowest since July 2010 on Friday. The index has fallen more than 23 percent since hitting a three-year high in May and is also down 17 percent since January.

European stocks lost 0.8 percent while emerging stocks hit their weakest since September 2009.

The lurch lower in risk appetite can only reflect a growing fear that policymakers will be incapable of acting in time or with sufficient potency to turn things around, said Herv Goulletquer, analyst at Credit Agricole.

U.S. crude oil dropped 1.8 percent to $78.40 a barrel.

Bund futures were up nine ticks before trimming gains.

The dollar was steady against a basket of major currencies.

The euro fell as low as 101.90 yen and hit an eight-month low of $1.3361.

(Additional reporting by Emelia Sithole-Materise; Editing by Toby Chopra)