HONG KONG -- Worries about Europe's banking woes and debt problems in the U.S. dragged global stock markets lower on Monday. Crude oil fell below $97 and the dollar strengthened against the euro while falling slightly against the Japanese yen. The results of stress tests on European banks that were released after the close of trading Friday overshadowed the start of this week's trading. The results did little to reassure investor confidence in the continent's shaky financial sector, revealing that eight of 90 European banks flunked tests aimed at revealing how they would fare in another recession. Another 16 barely passed. Ahead of an emergency meeting of EU leaders later this week, investors are growing more worried that Europe's debt crisis will spread to Italy and Spain. Investors are also unsettled by the inability of U.S. politicians to work out a deal to avoid a debt default before a deadline that is just two weeks away. "Looking ahead, sovereign debt worries in the U.S. and Europe and a pickup in second-quarter U.S. earnings data are going to compete for traders' attention," said Ben Potter, a research analyst at IG Markets in Melbourne, Australia. "The only real certainty in the coming days is that there is likely to be volatility as the market grapples with these major issues." Francis Lun, managing director of Lyncean Holdings in Hong Kong, said that market reaction is "quite negative" to the stress test results. "It really shows that it would be a long time before Europe can solve its problem," he said. In early European trading, the FTSE 100 index fell 0.8% to 5,793.73 and France's CAC-40 dropped 1.3% to 3,678.26. Germany's DAX slid 1.1% to 7,137.13. U.S. stocks were poised to fall. Dow futures were down 0.6% to 12,380.00 while S&P 500 futures were down 0.6% to 1,306.30. In Asia, South Korea's Kospi slipped 0.7% to close at 2,130.48 and Australia's S&P/ASX 200 shed less than 0.1% to 4,539.90. Hong Kong's Hang Seng fell 0.3% to finish at 21,804.75. Mainland Chinese shares edged lower amid concerns over inflation will remain high in the coming few months, analysts said.