By Nina Bains & Michele Maatouk European stocks fell and the euro sank against the dollar Monday, as investors looked to a meeting of euro-zone finance ministers for further clues as to whether Spain will request a bailout, while industrial output in Europe's largest economy fell. Industrial output in Germany fell 0.5% on the month in August, in line with estimates, while the figure for July was revised lower to show an increase of 1.2%, rather than the 1.3% rise previously reported. "August's small fall in German industrial production suggests that the economy probably continued to expand in the third quarter," said Jennifer McKeown, senior European economist at Capital Economics. "While Germany is faring relatively well for now, we suspect that it will slip back into recession around the turn of the year." Earlier, data showed German exports in August rose sharply, increasing 2.4% from the previous month, and up 5.8% from August last year. Orders from outside the euro zone lent strong support. Germany also managed to sell EUR2.42 billion ($3.16 billion) of six-month treasury bills, or Bubills, at an average yield of -0.0218% from -0.0147% at the last auction. Concerns about global growth also undermined sentiment, after the World Bank cut its forecasts for economic expansion in developing East Asia and said that a major crisis in the euro zone has the potential to wipe over two percentage points off growth next year. It also forecast China's economy would expand by 7.7% this year, compared with an original forecast of 8.2%. The Organization for Economic Cooperation and Development's composite leading indicators also signaled that most major economies are to slow further in coming months. By mid-morning Monday, the benchmark Stoxx 600 index was down 1% at 271.43, the U.K.'s FTSE 100 index was off 0.8% at 5824.71, Germany's DAX had slid 1.5% to 7288.21 and France's CAC-40 had dropped 1.3% at 3410.73. Cyclical stocks bore the brunt of the selloff, with the Stoxx Europe 600 autos index retreating 1.9% and the basic resources and bank gauges off 1.7% and 1.6%, respectively. The Eurogroup meeting will get under way later in Luxembourg with Spain expected to feature high on the finance ministers' agenda for the next couple of days, as Prime Minister Mariano Rajoy has yet to seek a bailout. The yield on Spain's 10-year government bond was down 0.04 percentage point at 5.62%, while the corresponding Italian yield was 0.01 percentage point higher at 5.05%, according to Tradeweb. On Tuesday, German Chancellor Angela Merkel is due to visit Greece. The troika--the International Monetary Fund, the European Union and the European Central Bank--still has reservations about certain aspects of Greece's austerity plan and wants the government to make more spending cuts next year than planned. Greece's ASE Composite index was flat at 830.18, Italy's FTSE Mib lost 1.9% to 15574.24 and Spain's IBEX 35 was 1% weaker at 7874.30. As nerves crept in ahead of the two-day meetings of euro-zone finance ministers, the safe-haven December Bund contract was well bid, rising 43 ticks to 141.30. In currency markets, the euro weakened to $1.2940 from $1.3034 late Friday in New York. The dollar was at Y78.16 from Y78.66. Elsewhere, European Aeronautic Defence & Space and BAE Systems were down 0.7% and 1.1%, respectively, after BAE Systems' largest shareholder highlighted its reservations about BAE's proposed merger with EADS. Traders attributed some of Monday's selloff to jitters ahead of the start of the third-quarter earnings season in the U.S., which kicks off on Tuesday with Alcoa. It is a public holiday in the U.S. for Columbus Day, but the stock market will be open. The Dow Jones Industrial Average front month futures contract was 0.4% lower at 13,478.00 and the S&P 500 futures contract was off 0.5% at 1448.70. November Nymex crude oil futures were down $1.54 at $88.34 a barrel and the November Brent oil contract was down $1.14 at $110.88. Spot gold was down $10.20 at $1,767.90. Write to Michele Maatouk at michele.maatouk@dowjones.com

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