PARIS, May 7: World stocks diverged and the euro wavered on Monday as investors fretted over what direction the eurozone debt crisis would take after voters in Greece and France turned against German-led austerity.

The Paris stock exchange’s CAC 40 index had opened down 1.52 per cent, amid concerns that EU voters are hardening their opposition to deficit-cutting austerity programmes, but later rallied to show a 0.68 per cent gain in afternoon trading.

Shares in Italy and Spain, countries with huge sovereign debt exposures, also switched gears with Madrid’s IBEX 35 index up a sharp 1.90 per cent and Milan 1.63 per cent higher.

But in Germany, the eurozone powerhouse and paymaster, shares persisted in negative territory with Frankfurt’s DAX 30 down 0.14 per cent. London’s exchange was closed for a holiday.

Stocks in Athens plunged 7.78 per cent after Greece’s mainstream parties fell short of a governing majority, putting hard won agreements to save the country’s economy and membership of the eurozone back into question.

US stocks opened modestly lower with the Dow Jones Industrial Average down 0.37 per cent, the S&P 500 losing 0.24 per cent and the tech-heavy Nasdaq off 0.34 per cent.

In Asia, stocks slumped with Tokyo diving 2.78 per cent and Hong Kong down 2.61 per cent, hit by the European votes as well as weak jobs data from the United States at the end of last week.

The euro fell to $1.2954, the lowest level since late January, but then rallied to $1.3033 at 1230 GMT, but still below $1.3082 in New York late on Friday.

“The global financial markets aren’t thrilled by the idea that France and Greece have voted for governments less willing to work with the Germans on a consistent approach to addressing their fiscal deficits,” said Dick Green.

As trading opened, the interest rate on France’s benchmark 10-year bonds rose and the difference between interest rates on French and German debt, a critical measure of tension in the eurozone, widened slightly.

But the trend changed direction later with the French yield dipping to 2.79 per cent at around 1230 GMT below Friday’s closing rate of 2.809 per cent.

France later raised nearly eight billion euros in short-term debt, with rates falling on two maturities.

But the German government ruled out reworking the European Union’s fiscal pact despite calls for including growth measures by Hollande.

Sarkozy and Merkel had led a strident drive for budget cuts across Europe as the key for the region to emerge from the debt crisis.

Meanwhile ratings agency Standard and Poor’s, which had stripped France of its top triple-A rating in January, said Hollande’s victory would have no immediate impact on its rating or outlook.—AFP