The euro slipped further on Tuesday and European stock futures fell after data showed Germany's economy hardly grew in the second quarter, adding to global uncertainties ahead of French-German talks on the euro zone's worsening debt crisis.

U.S. stock futures also extended early losses to 0.8 percent and Asian shares pared gains after the report that Germany's gross domestic product grew just 0.1 percent in April-June from the previous quarter, below market expectations for an expansion of 0.5 percent.

European stock index futures fell 0.7 percent while German DAX futures slid 0.9 percent. Before the report, major European markets had been expected to open slightly higher following strong gains on Wall Street overnight.

The euro fell further after the German data, hitting $1.4385 on the EBS trading platform and taking its losses to about 0.4 percent on the day.

It had risen 1.4 percent in the previous session ahead of a meeting between the leaders of France and Germany on Tuesday (1400 GMT), and was already looking vulnerable to a pullback.

Most in the market do not expect the meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel to lead to substantial progress in solving the euro zone's debt troubles.

The German government sees no major breakthrough at the Paris talks, a spokesman said on Monday, while the French president's office said the creation of common euro zone bonds will not be on the agenda.

Sovereign debt concerns remain a persistent negative for the (euro), as the EU's latest attempt at delivering a comprehensive solution to the region's vulnerabilities has disappointed investors, analysts at Standard Chartered said in a research note.

Traders were also awaiting euro zone second-quarter GDP data at 5 a.m. EDT.


Many experts say the only way to ensure affordable financing for the euro zone's most struggling, debt-laden countries would be for the bloc to issue joint eurobonds.

But even if a common euro zone bond were issued, it would not end the euro zone's debt woes at a stroke.

There still hasn't been debate about just how much issuance would be possible and just how much issuance the German public would be okay with, said Makoto Noji, senior bond and currency strategist for SMBC Nikko Securities in Tokyo.

The dollar index against a basket of major currencies edged up 0.2 percent.

Against the yen, the dollar traded around 76.84, down from more than 80 yen earlier in August.


Asian shares initially drew succor on Tuesday from news that Google has offered to buy Motorola Mobility Holdings Inc for about $12.5 billion. The deal helped push up major Wall Street indexes by as much as 2.2 percent.

But most Asian markets later pared gains, with Australia and Hong Kong felling into negative territory, following weakness in S&P futures and in Europe.

Japan's Nikkei struggled to close 0.2 percent higher, while MSCI's index of Asia ex-Japan stocks rose 1 percent, but the gain was largely due to a sharp jump in Korean shares which were catching up to regional gains on Monday, when Seoul markets were closed for a holiday.

The MSCI Asia ex-Japan index had lost around 14 percent over the past two weeks, part of a global market rout in which billions of dollars were wiped off share indexes.

Pranay Gupta, chief investment officer Asia Pacific at ING Investment Management, said Asia's corporate sector is struggling despite the region's strong economic fundamentals, due to debt woes in the United States and Europe, and the appreciation of Asian currencies.

The anomaly that we have today is that companies in Asia are facing a much more uphill struggle both on the sales front and on the margins front given that demand from the West is waning, he said.

He said that the ING Investors Dashboard Pan-Asia (ex-Japan) Sentiment Index, a measure of private investor confidence in the region, had dropped 11 percent in the second quarter compared to last year's third quarter.

The S&P 500 last week hit its lowest in nearly a year after the first-ever downgrade of U.S. sovereign credit ratings, but have since rebounded almost as sharply.

Gold, seen by many as a safe store of value in turbulent financial markets, is one of the best-performing assets this year. It traded at $1,767 per ounce on Tuesday, little changed from Monday's close and around $50 off its peak.

U.S. crude oil futures slipped 75 cents to $87.16 per barrel after a $2 rise on Monday.

(Additional reporting by Masayuki Kitano, Frederik Richter and Kevin Plumberg; Editing by Kim Coghill)