European stocks fell from early highs on Monday after Germany warned against undue enthusiasm that a lasting solution to the eurozone debt crisis would emerge from an EU summit next weekend.
Europe's main equity markets had opened strongly in the wake of strong finishes across the Asia-Pacific region, but by mid-afternoon dropped into negative territory.
The euro, which had rallied in the morning to above $1.39 for the first time in a month, also fell back after sobering comments from Germany.
In European midday trade, London's benchmark FTSE 100 index was down 0.11 percent at 5,460.47 points, Frankfurt's DAX 30 lost 0.93 percent to 5,911.47 points and in Paris the CAC 40 dropped 0.48 percent to 3,202.30.
The euro reached an intra-day high of $1.3914, before tumbling to $1.3781. That was down from $1.3881 in New York on Friday. The dollar fell to 77.14 yen from 77.21 yen on Friday.
Shortly after the open of trading on Wall Street, the Dow Jones Industrial Average slid 0.52 percent, the S&P 500 fell 0.68 percent and the tech-heavy Nasdaq dropped 0.68 percent.
Germany sought to dampen expectations for Sunday's European Union summit in Brussels, with government spokesman Stefan Seibert warning that "dreams that everything will be resolved and dealt with by next Monday cannot be fulfilled."
Finance Minister Wolfgang Schaeuble said that decisions would be part of "important measures to be taken over the long term, and this long term is likely to last into next year."
The tone was a marked change from the weekend when, speaking after a meeting of G20 finance ministers and central bankers in Paris, French Finance Minister Francois Baroin said the eurozone answers at the summit would be "decisive".
EU Commission President Jose Manuel Barroso also said decisions next weekend must be decisive and unanimous.
The G20 finance chiefs had welcomed Europe's voiced determination though making it clear still more needed to be done.
US Treasury Secretary Tim Geithner warned that the plan must include measures to ensure that European governments could borrow at sustainable interest rates, a broad recapitalisation of banks, and further support for debt-laden Greece.
Reducing Greece's debt to a more sustainable level is emerging as a key element to resolve the eurozone crisis.
After boosting their European Financial Stability Facility (EFSF) bailout fund to 440 billion euros, eurozone leaders are studying ways to leverage its assets up to 2.5 trillion euros.
Macquarie Private Wealth investment adviser John Milroy said: "I think the move toward a plan that's credible and deliverable is what the market is focusing on and the time frame has really been tightened up with the EU summit this weekend now expected to agree on a plan."
Markets also digested major takeover news. US gas pipeline and energy storage giant Kinder Morgan on Sunday announced a deal to buy rival El Paso Corp for about $38 billion.
And on Monday, Norway's Statoil announced the purchase of US oil company Brigham Exploration for $4.7 billion.
The purchase will give the Norwegian energy giant access to shale oil fields in the Bakken and Three Forks formations in the states of North Dakota and Montana -- among the largest oil accumulations in the United States.
British security group G4S meanwhile said it had agreed to buy Denmark-based facilities company ISS for £5.2 billion, creating the world's largest security and facilities group.
In Asia on Monday, the Tokyo stock market closed 1.50 percent higher, Sydney ended up 1.70 percent and Seoul gained 1.62 percent.