Europe midday: Stocks drag as US fiscal cliff looms

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LONDON (ShareCast) - FTSE 100 (FTSE: ^FTSE - news) : -1.21%
Dax (Xetra: ^GDAXI - news) -30: -0.86%
Cac-40: -0.18%
FTSE Mibtel 30: 0.70%
Ibex 35: -0.39%
Stoxx 600: 0.34%


European equities continued to drag by the midday mark Monday as hopes faded over whether US leaders would reach a budget deal in time to avoid the fiscal cliff.

Lawmakers will scramble in Washington at 11:00 local time, in a last-ditch effort to save the country from more than $600bn in spending cuts and tax hikes due to begin Tuesday.

Should the Democrat and Republican politicians fail to find a solution before the end of year deadline, the country will see cuts that could lead to two million long-term employees losing their benefits and tax rises for 88% of Americans.

President Obama said if nothing is produced by then, he will press the Democratic Senate leader Harry Reid to call a vote on a separate White House plan.

However, time is running out and the US is no closer to reaching a deal after Reid said late Sunday there was "still significant distance between the two sides".

The economic climate for 2013 is looking no brighter for the Eurozone either, according to German Chancellor Angela Merkel.

In excerpts of her New Year's speech to the nation, Merkel has warned the financial crisis is far from over despite the progress already made of reforms.

"The reforms that we've agreed on are starting to take effect. Nevertheless, we still need a lot of patience. The crisis is far from over," she explained.

Afferro Mining (Other OTC: AFRIF - news) climbs

Afferro Mining shares rocketed 11.45% to 101.50p after the company confirmed it had been approached by International Mining and Infrastructure Corporation.

Spain's largest utility Iberdrola (Other OTC: IBDRY - news) fell 1.14% to €4.15 after Bolivian President Evo Morales ordered the nationalisation of four of its business units.

A number of banks fell including HSBC (LSE: HSBA.L - news) which dropped 0.71% to 646.70p and Banco Sabadell which declined 2.83% to €1.96.

Bankia bounced back with a rise of 5% to €42.4 after the lender fell to an all-time low of 41% in the two days through December 28th following Spain giving it a negative value of €4.15bn.

Brent crude declines

The euro declined 0.23% to the 0.9947 dollar on Monday.

Front month Brent crude futures were falling by 0.839% to 109.700 on the ICE.