European stocks, euro drop

European stock markets retreated and the euro fell against the dollar Monday as traders banked profits following last week's rally triggered by the US Federal Reserve's new stimulus programme. London's benchmark FTSE 100 index fell 0.31 percent to 5,896.92 points in late morning deals, Frankfurt's DAX 30 dropped 0.24 percent to 7,393.92 points and in Paris the CAC 40 shed 0.59 percent to stand at 3,560.33. The Madrid market slid 0.65 percent and Milan gave up 1.13 percent. "European equity markets are starting the new trading week off on a somewhat weaker note pressured by lower markets in China on renewed growth worries," said ETX Capital trader Markus Huber. He added that "some moderate profit-taking after last week's impressive gains and disappointment that the EU meeting in Cyprus didn't yield any new steps in regard to combating the European financial crisis" also weighed. Despite Monday's falls, European markets have made strong gains over the past three months, with the FTSE up nearly 8.0 percent, the DAX surging about 19 percent and the CAC by 15 percent. In foreign exchange deals on Monday, the euro slipped to $1.3102 from $1.3127 late in New York on Friday, when the European single currency hit a four-month high at $1.3169. Analysts said the euro had been buoyed by a flight away from the dollar on expectations of higher US inflation caused by the added US stimulus, and by receding worries over the eurozone debt crisis. European stocks and euro made hefty gains at the end of last week after the Fed announced a huge stimulus plan to boost the US economy. The US central bank last Thursday said it would unleash a huge open-ended bond-buying programme aimed at jumpstarting growth and boosting jobs in the world's largest economy. It also said it would extend its "Operation Twist" scheme of selling short-term debt and buying long-term bonds with the proceeds in order to keep long-term interest rates as low as possible. The Fed move came a week after the European Central Bank said it would buy unlimited quantities of debt from under-pressure eurozone nations such as Spain and Italy in a bid to cut their borrowing costs, which had hit danger levels. In company news, Royal Dutch Shell on Monday said it was delaying until next year exploratory drilling for oil in offshore Alaska after suffering damage to a dome used to contain any potential spills. In reaction, Shell's 'A' share price fell 0.58 percent to 2,247.9 pence in morning deals on London's FTSE 100 index.