Jan. 30 (Bloomberg) -- European stocks fell, headed for the biggest two-day drop in two months, Treasuries rose and the euro weakened as Greece signaled opposition to economic oversight in exchange for aid. Italian bonds fell as the government sold debt and the cost of insuring Portuguese debt reached a record high. The Stoxx Europe 600 Index slumped 0.8 percent at 6:30 a.m. in New York. Standard & Poor's 500 Index futures lost 0.6 percent. The 10-year U.S. Treasury note yield slipped four basis points, while Italy's 10-year yield rose 22 basis points. The euro weakened 0.7 percent to $1.3127, and the Dollar Index added 0.5 percent. Credit swaps implied a 71 percent chance Portugal will default within five years. Copper retreated 1.6 percent. European policy makers are discussing plans to directly intervene in Greek budget decisions as the country struggles to cut its deficit, two euro-region government officials said Jan. 28. Greek Finance Minister Evangelos Venizelos yesterday rejected reports of plans to appoint a commissioner, citing "national dignity." Italy sold 7.5 billion euros ($9.8 billion) of debt, near the maximum for the auction. "Even with a resolution, the bottom line is that there's going to be tough medicine having to be swallowed by Europe," said Gavin Stacey, chief interest-rate strategist at Barclays Capital in Sydney. "There is a greater risk of a pullback in euro strength." EU Summit European Union leaders gather in Brussels today for their first summit of 2012 to put the finishing touches on a German- led deficit-control treaty and endorse a 500 billion-euro ($661 billion) rescue fund to be set up this year. Greece and its private creditors said Jan. 28 they expect to complete a deal in coming days after bondholders signaled they would accept a bigger cut in their debt holdings. The Stoxx 600 has fallen 1.8 percent over the past two days, the biggest drop since Nov. 23. French banks slipped as President Nicolas Sarkozy said he will unilaterally impose a 0.1 percent tax on financial transactions from August. BNP Paribas SA fell 5.3 percent and Societe Generale SA sank 5.6 percent. Germany is proposing the creation of a commissioner, appointed by euro-member states, with power to veto budget decisions by Greece as a condition of 130 billion-euro bailout for Athens, the Financial Times said, citing a copy of the proposal. "Our partners acknowledge that European integration is based on the institutional equality of nation-states and on respect for their national identity and dignity," Venizelos said in an e-mailed statement from his office in Athens yesterday. "Whoever poses a dilemma between economic aid and national dignity is ignoring basic historical lessons." Personal Spending The decline in S&P 500 futures indicated the U.S. equities benchmark will drop for a third day. A Commerce Department report at 8:30 a.m. in Washington may show personal spending rose 0.1 percent in December, matching November's gain, according to a Bloomberg survey of economists. Sixty-six percent of the 169 companies in the S&P 500 that have reported earnings since Jan. 9 topped analysts' forecasts, according to data compiled by Bloomberg. The euro depreciated 0.6 percent against the yen, and weakened to the least since Sept. 20 versus the Swiss franc. The Dollar Index, which tracks the U.S. currency against those of six trading partners, advanced 0.5 percent. The decline in the Italian bond sent the extra yield investors demand to hold the securities instead of benchmark bunds 32 basis points higher to 436 basis points, or 4.36 percentage points. France auctions as much as 8.3 billion euros of bills maturing from 84 to 343 days.

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