The euro dropped 1 percent and European stock index futures fell Monday, following a slide in Asian shares, after a meeting of European policymakers' produced no new ideas for solving the sovereign debt crisis.

A weekend of disappointing news from the euro zone prompted market players to cut risk and move into gold and U.S. Treasuries, even as speculation grew that the Federal Reserve would announce further policy easing moves to stimulate the sputtering U.S. economy at a meeting this week.

Euro STOXX 50 index futures fell 2 percent, and DAX and CAC-40 futures also dropped sharply, while financial bookmakers called for the FTSE 100 to open down as much as 1 percent.

I guess it's just the lack of progress in Europe and the realization that Greece is probably going to default at some point, Colin Whitehead, analyst at stock research house Fat Prophets in Sydney, told Reuters.

Until the market has confidence that policy is in place to actually handle that default, I guess we are still looking at pretty weak sentiment.

An EU finance ministers meeting in Poland over the weekend broke no new ground in dealing with the debt crisis.

The cancellation of a visit by Greek Prime Minister George Papandreou to the United States to chair an emergency Cabinet meeting at home, and a regional election defeat for German Chancellor Angela Merkel, added to a sense of worsening crisis.

S&P 500 stock index futures fell 1.6 percent, pointing to pullback on Wall Street after five days in the black last week.

MSCI's index of Asia Pacific shares outside of Japan fell 2.4 percent, edging back toward its July 2010 low hit last Monday. Australia's index fell 1.7 percent, while Hong Kong's Hang Seng Index lost 2.4 percent.

Emerging Asian currencies continued to come under pressure, in a trend sparked by mutual fund managers taking profits on regional bets to cover losses elsewhere in their portfolios.

The Korean won fell around 2 percent against the dollar and sank to a two-and-a-half year low versus the yen.

TOUGH DECISIONS

Greece on Sunday pledged to take tough decisions needed to secure a fresh round of international aid and avoid default, but announced no new austerity measures.

EU and IMF inspectors will hold a conference call with Finance Minister Evangelos Venizelos later Monday to hear how Greece plans to plug this year's budget shortfall.

At stake is an 8 billion euro loan tranche from a 110 billion euro bailout secured last year, which Athens needs by October to avoid running out of cash.

A Reuters poll of more than 50 economists last week gave a 65 percent chance of a Greek default, but only a one-in-five chance it will leave the euro.

Global equities have been pummeled since late July on the twin concerns of renewed recession in the United States and Europe's sovereign debt woes, which many fear could morph into a full-blown banking crisis.

MSCI's Asia-Pacific ex-Japan index is down 21 percent from its 2011 high reached in April.

Speculation is mounting that the Fed will take steps to lengthen the maturity of its debt holdings at a two-day meeting ending on Wednesday, forcing down longer-term U.S. interest rates.

Before that, President Barack Obama will release plans later on Monday calling for more than $3 trillion in deficit cuts over 10 years, with about half the savings coming from higher taxes on the wealthy and big corporations.

A battle with Republicans in Congress over how to cut the deficit and create jobs is likely to highlight the partisan deadlock in Washington that has rattled investors and prompted Standard & Poor's to cut America's credit rating in August.

EURO WEAK, DOLLAR GAINS

In currency markets, the euro dropped around 1 percent against the dollar, with investors looking toward a G20 meeting on Thursday and Friday for any likelihood of coordinated action to restore market confidence.

The euro traded around $1.3666, edging back toward a seven-month low hit last week, and fell 0.7 percent to 105.08 yen.

While expectations of further Fed policy easing might have typically weighed on the dollar, the search for safety meant investors remain keen to hold the currency, which rose 0.8 percent against a basket of major peers .DXY.

The yield on 10-year Treasuries held at around 2.06 percent, not far from their lowest in 60 years.

This week will be another good one for the USD with weakness in euro, pound and Aussie, said Joseph Capurso, currency strategist at Commonwealth Bank of Australia.

The pullback in risk appetite also increased demand for safe haven gold, with the precious metal extending its chunky gains from Friday by 0.5 percent to $1,820 an ounce. It hit a record around $1,920 earlier this month.

Oil fell around $1 due to worries that economic woes could hit demand and on the stronger dollar, which makes it more expensive for holders of other currencies.

Brent crude fell 0.7 percent to $111.40 a barrel and U.S. crude slipped 1.5 percent to $86.61.

Look at what's happening in Europe. People are beginning to see that it is taking a lot longer than anticipated to resolve the issue, Jonathan Barratt, managing director of Commodity Broking Services in Sydney.

Longer uncertainty means the demand outlook for oil remains weak.