World markets baulk at the G20's decision to drop a decade-old pledge to resist trade protectionism, with stocks, the dollar, oil and the price of many major sovereign bonds all sliding into the red. Silvia Antonioli reports.
European markets slid from 15-month highs as the week got underway. Weaker crude prices weighed on oil stocks and Deutsche Bank's 8-billion-euro cash call spooked investors, dragging down the banking sector. But markets were also digesting the outcome of the G20 meeting. In a fine balancing act, the group agreed to drop a decades-old free trade pledge, bending to the new U.S. administration's protectionist stance. (SOUNDBITE) (English) JEREMY BATSTONE-CARR, INDEPENDENT MARKET ANALYST "It does appear very much as this is a move to find some ground to agree with the U.S. and keep them in the fold because there was a high risk going into Baden Baden that the U.S. delegation might have simply walked out. " Japan's Prime Minister Shnizo Abe and Germany's Angela Merkel did speak up for free trade at a major technology fair on Sunday. They both called for a free trade deal between Japan and the EU, with digs clearly directed at the U.S. administration. (SOUNDBITE) (Japanese) JAPANESE PRIME MINISTER, SHINZO ABE, SAYING: "The open and free system, based on rules, has brought us here. And together with Mrs Merkel I want to walk that way in order to safeguard and strengthen that system." With the US also pushing for lighter banking rules to spur growth, G20 leaders agreed to review regulation. But the group said it would push ahead with Basel III, a global banking accord designed to avoid future financial crisis. G20 leaders also dropped a reference to climate change fight, to appease climate skeptic US and highlighting further efforts to patch up differences with the world's largest economy. Failure to do so could send shockwaves across financial markets and beyond.