Doubts over bank deal see shares tumble in eurozone

Eurozone shares fell today after Germany poured cold water on hopes a deal to recapitalise the region's banks could be done by the weekend.

Stock markets all fell by between 1% and 2% across the region when German finance minister Wolfgang Schauble said: "We will not have a definitive solution this weekend."

It did appear, however, that eurozone leaders were likely to agree to allow the bailout fund to guarantee some newly-issued debt for the region.

The European Financial Stability Facility would promise investors buying Spanish, Italian or other higher-risk sovereign debt that it would cover some of the losses from any default.

That idea is controversial as it effectively means contributers to the EFSF - mainly Germany and France - taking on the liabilities of weaker countries.

Some analysts have predicted such a deal would threaten France's coveted AAA credit rating. Moody's had warned it might put a "negative outlook" warning on France's bonds today.

French bond yields rose to their highest levels compared with German bunds in 16 years today.

"France is at the heart of the nexus as regards the ongoing debt risk transfer in the eurozone," warned Rabobank strategist Richard McGuire.