Angela Merkel along with leaders of France, Italy and Spain agreed on a 130 bn euros package
Investors were sceptical that a June 28-29 European Union summit would make any substantial progress towards tackling the debt crisis, now in its third year and buffeting Spain, the region's fourth largest economy.
German Chancellor Angela Merkel agreed on Friday with leaders of France, Italy and Spain on a 130 billion euros package to revive growth but resisted pressure for common euro zone bonds or a more flexible use of Europe's rescue funds.
European stocks fell 0.6 percent, retreating for a third successive session after Friday's meeting cooled expectations for a break-through in the debt crisis.
"It's difficult to see too big a jump forward from these meetings because we have had so many until now. The past experience tells us not to expect a significant amount of news," Keith Bowman, equity analyst at Hargreaves Lansdown, said.
"It's a very much politically-oriented market and that makes it very difficult for investors. Investors are also nervous ahead of the second quarter earnings season."
The downbeat tone in equities spurred demand for low risk assets, helping German bonds to snap three weeks of losses. Bund futures were last up 39 ticks at 141.26 while U.S. bond prices also rose in Europe, pushing their yields lower.
The euro fell broadly, extending last week's losses. The single currency slid 1 percent against the safe-haven yen to a day's low of 100.05 yen and was last 0.5 percent lower against the dollar at $1.2506.
U.S. stocks finished the first half of the year with a bang as investors welcomed news that the euro zone is a step closer to solving its ...