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U.S. stocks fell Wednesday as investors assessed European efforts to fix the region’s debt problems and weak US Data. The DJIA ended down 72.43 points, or 0.6%, at 11,504.62, after rising nearly 57 points and falling as much as 108 points. The index had been higher before the Federal Reserve’s afternoon release of regional indicators, known as the Beige Book. The Beige Book report said many districts saw “modest” to “slight” growth. “Contacts generally noted weaker or less certain outlooks for business conditions,” the report said. Investments recently sought as safe-haven assets, such as Treasurys and the U.S. dollar, pared losses after the report. The S&P ended down 15.5 points, or 1.3%, to 1,209.88 points. It had risen as high as 1,229.64. Losses were led by declines in the metals and chemicals-heavy materials sector, followed by technology. Markets were sensitive to media reports on possible European efforts to leverage their bailout fund.

French President Nicolas Sarkozy was expected to fly to Frankfurt Wednesday to meet with German Chancellor Angela Merkel, International Monetary Fund chief Christine Lagarde and other officials ahead of a key summit meeting of euro-area leaders on Sunday, news reports said. Sarkozy told French lawmakers that a dispute over how to boost the firepower of the European Financial Stability Facility, the region’s bailout fund, had stalled talks, Reuters reported. E.U. leaders are expected to announce progress on the region’s debt crisis at a summit meeting this Sunday. The caution, however, is that European leaders need to come up with a large-funded, specific plan or risk a flop much like Treasury Secretary’s Timothy Geithner’s much-criticized stability plan in February 2009. Markets are on pause as to what’s going to come from Europe. The market could drift higher toward 1270 in the S&P with the absence of anything affirmative, but so far we’ve seen a lot of talk and no action, so we have to keep an eye toward disappointment.

As other major economies tried to pressure European leaders to get a deal done, Canada’s Finance Minister Jim Flaherty called the slow progress “disconcerting” and the head of the World Bank urged policymakers to take “definite steps”. ”I believe this can come together and I believe that since our annual meeting in September, the Europeans have been much more … focused about this issue, but I also believe there’s not a lot of room for error,” World Bank President Robert Zoellick told reporters in Michigan. France has argued the most effective way of leveraging the European Financial Stability Facility (EFSF) is to turn it into a bank which could then access funding from the ECB, but both the central bank and the German government have opposed this. ”In Germany, the coalition is divided on this issue. It is not just Angela Merkel whom we need to convince,” Sarkozy told the parliamentarians at a lunch meeting.

His comments fuelled doubts about whether euro zone leaders will agree a clear and convincing plan when they meet on Sunday. Failure to do so would further undermine financial markets’ already shattered confidence in the currency bloc and its ability to get on top of a two-year-long debt crisis, which threatens the long-term viability of the single currency. Adding to uncertainty, the Financial Times reported that plans to strengthen the banking system, another key plank of the discussions, would fall short of market expectations. The latest official estimates have put the banks capital shortfall at less than 100 billion euros, the FT said, compared with a recent IMF report putting the funding hole and 200 billion and analysts’ estimates of 275 billion or more.

Finland’s Prime Minister, Jyrki Katainen, added his voice to what appeared to be efforts to lower expectations, telling public broadcaster YLE he did not believe Sunday’s summit would resolve the euro zone debt crisis. ”I don’t believe that such solutions could be made on Sunday that would … fix everything. But I’m certain that there will be decisions that point to the right direction,” he said in comments broadcast on Wednesday. ”We’re trying the whole time,” said EU Economic and Monetary Affairs Commissioner Olli Rehn after the Merkel-Sarkozy meeting, when asked about the chances of reaching a deal at the weekend summit. Nevertheless, the hope remains that leaders will agree new steps to reduce Greece’s debt, strengthen the capital of banks with exposure to troubled euro zone sovereigns and leverage the euro zone’s rescue fund to stem contagion to bigger economies.