Most European stocks slid today on doubts about reforms to contain new eurozone debt pressures amid street protests, pushing the price of safe-haven gold to a new record.

Another safe-haven instrument, the Swiss franc, also surged and the Swiss central bank sprang a surprise, setting a target "peg" exchange rate against the euro.

"Markets are in a dangerous phase with the eurozone debt and banking crisis bringing back memories of (the financial crisis in) 2008 at a time now when there are concerns about the health of the global economy," said VTB Capital economist Neil MacKinnon.

"Flight to safety themes are dominant in this environment."

Athens raised short term funds at reduced rates, but Greece and also Italy are at the centre of renewed tension over the eurozone debt crisis.

Demonstrators took to streets in Italy and Spain to protest against deep crisis cutbacks in public spending.

The euro slid to $1.4010 from $1.4098 late yesterday. The dollar gained to 77.45 yen from 76.89 yen.

European stocks staged a moderate comeback in the morning after slumping by about 4.0 percent yesterdy, but most began to slide in the afternoon.

London's FTSE 100 index of leading companies managed to stay in positive territory, climbing 1.06 percent to 5,156.84 points.

In Paris, the CAC 40 fell 1.13 percent to 2,965.64 points and in Frankfurt the DAX dropped 1.0 percent to 5,193.97 points.

Milan dropped 1.98 percent, unimpressed by moves by Prime Minister Silvio Berlusconi's government to reinforce its austerity proposals.

Brussels fell 0.36 percent, Amsterdam slid 0.41 percent, Madrid dropped 1.61 percent, and Lisbon slumped 2.47 percent.

"The deteriorating fiscal situation in Europe continues to spook investors, with continued political discord amongst EU leaders making the likelihood of a quick solution pretty nigh or impossible," said CMC Markets analyst Michael Hewson.

US stocks plummeted in opening trade as investors returned from a long holiday weekend worried about European debt problems and the health of the US economy.

Extending Friday's sharp losses, the Dow Jones Industrial Average slumped 1.88 percent to 11,028.61 points approaching midday.

The S&P 500-stock index, a broader measure of the markets, fell 1.83 percent to 1,152.54 points, while the tech-rich Nasdaq Composite dropped 1.73 percent to 2,437.46 points.

"US stocks are under solid pressure in early trading on the heels of a sharp sell-off in Europe yesterday amid the festering eurozone sovereign debt crisis uneasiness," analysts at Charles Schwab said in a research note.

"Also, concerns about the health of the US economy are weighing on sentiment following Friday's disappointing labor report."

No new jobs were created in the United States in August, according to that report, which stoked fears that the US economy might be slipping into a double-dip recession.

Tokyo's stock market slumped to a two-year low point and most other Asian markets tumbled, extending Monday's losses caused also by a dismal batch of US jobs data last week that raised concerns of a double-dip recession in the US economy, the biggest in the world and a key market for exports from Asia.

The eurozone meanwhile reported on Tuesday shrinking 0.2-percent growth in the second quarter of 2011, dragged down by a rapid decline in German performance and a stagnant France economy.

Gold, seen as a safe bet in times of economic uncertainty, jumped on Tuesday to a record high price above $1,921 an ounce on the London Bullion Market. It finished the day flat at $1,895.

The Swiss National Bank meanwhile set a minimum exchange rate of 1.20 francs per euro, saying the current value of the safe haven Swiss currency was a threat to the economy.

The Swiss franc has risen strongly in response to the eurozone debt crisis, hitting Swiss exporters and the tourism industry hard. The Swiss franc fell sharply, closing down 8.48 percent to 1.2027 francs per euro. Swiss shares closed up 4.36 percent to 5,367.24 points.

Adding to strains in the European Union was news at the end of last week that the European Union and International Monetary Fund had left a critical audit of Greek finances unfinished saying more budget work was needed, while Athens admitted its deficit target was in trouble.

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