After some blue chips posted gains of more than 15% during the post-summit rally, a slide back to realistic levels was always likely.
At the open on Friday, US equities also showed muted losses with the three main indices treading water just in the red.
Ben Critchley, sales trader at IG Index, said: "There is a degree of consolidation taking place right now. While there could be some concern that the rally hasn’t been sustained, it’s worth acknowledging that we haven’t seen any notable reversion as a result of profit-taking."
French and German equities saw particularly strong increases in the aftermath of the debt deal, announced in the early hours of Thursday morning, with the major indices adding more than 5% to their value.
Meanwhile the FTSE 100 was up 2.5% on Thursday; with banks leading the way as some analysts noted their capital sheets were in much better shape than some of their European counterparts.
But details emerged later on Thursday that European officials had gone begging to China to help fund the bail out of its debt-riddled periphery, something which dampened enthusiasm for the deal somewhat.
It is hoped by Europe that China will pay around €70bn into the fund, which is due to rise to around €1trn following the agreement made earlier this week.
Since the onset of the European sovereign debt crisis, China has regularly bought bonds from the European Financial Stability Fund as a means of trying to maintain some stability in world markets.
Beijing has now made it clear, however, that any contribution it might make to bolster the EFSF’s firepower will depend on strong guarantees being provided for its capital.
A few weeks ago, reporting from Hong Kong, Portfolio Adviser said Europe should not depend on China to ride to the rescue during this particular crisis.
During the past few months, emerging markets in general, have been quietly dealing with their own economic problems.
Equity indices in the region have seen values plummet as risk adverse investors brought their money home and problems of inflation and slowing GDP growth have continued to develop.
Q3 GDP growth in China was down to 9.1% from 9.3% the previous quarter – its slowest rate for two years.
China might be happy to put some money in the pot to support its Western-friendly credentials, but expecting it to be a no-strings contribution is something even EU officials wouldn’t credit.
