European stocks drop in New Year trading

European stock markets fell on Friday, the first trading day of the year, hit by poorly-received manufacturing data from across the region, while the euro slid to four-year lows.
The European single currency was hit by possible new moves by the European Central Bank to ward off deflation, or falling prices, after comments by the central bank's chief Mario Draghi, traders said.
On stock markets in late morning deals, London's benchmark FTSE 100 index stood at 6,555.42 points, down 0.16 percent compared with the close on Wednesday.
Frankfurt's DAX 30 shed 0.73 percent to 9,734.14 points and the CAC 40 in Paris dropped 0.35 percent to 4,257.79.
Europe's main indices, which shut Thursday, had steadied overall in 2014 compared with the previous year as companies balanced sluggish regional growth alongside low inflation and interest rates.
"This morning's plethora of manufacturing PMI figures for Italy, Spain, EU and the UK have left no one in doubt that New Year’s resolutions to improve have been short-lived," said Alastair McCaig, market analyst at IG trading group.
Borrowing rates in France, Spain and Italy meanwhile fell to historic lows in thin holiday trading, as investors eyed new anti-deflation measures from the European Central Bank.
ECB chief Mario Draghi told German business daily Handelsblatt that the risk of deflation in the eurozone was "not excluded" although was likely to be "limited".
Analysts took this to mean that the ECB could announce as soon as January 22 new measures to buy sovereign bonds -- a form of stimulus referred to as quantitative easing (QE) that  central banks in the United States, Britain and Japan have already resorted to.
- Euro woes -
In foreign exchange deals on Friday, the dollar extended gains ahead of the release of US factory data and following a steady stream of good news from the world's biggest economy.
The single currency deals, the euro reached $1.2035, the lowest level since June 2010. The euro later bought $1.2051, down from $1.2097 on Wednesday.
With talk that Greece could still exit the eurozone, Lithuania welcomed a New Year and a new currency on Thursday, becoming the last Baltic nation to adopt the euro in a bid to boost stability despite fears of inflation and eurozone debt woes.
Greece's parliament was dissolved Wednesday ahead of an early election watched warily by markets and international creditors concerned that the austerity-weary country could start unwinding unpopular fiscal reforms.
Prime Minister Antonis Samaras has warned that the financially-stricken nation may be forced out of the eurozone if the election is won by radical leftist party Syriza which has vowed to reverse years of austerity imposed in return for financial aid.
"This month is already looking particularly important as a possible road map for the year ahead, with expectations high surrounding some form of European QE and the results of a Greek general election both due before the end of the month," said analyst McCaig.
"Fears that a considerably more anti-austerity party will take over from Prime Minister Antonis Samaras and disrupt the fragile stability that currently exists around Europe look to be giving investors a more cautious trading mind set."