Germany’s parliament approved the latest EFSF expansion. Will it continue to approve support?

Stocks slumped Monday as economic news indicated sustained slowness in both the U.S. and European recoveries, instigating a broad decline in European bank stocks. An earnings beat from Citi coincided with an earnings miss at Wells Fargo, sending shares in the latter bank down 8.4%.

The Federal Reserve Bank of New York’s general economic index for October increased to -8.5 from -8.8 in September. The improvement was less than analysts had expected, coming short of the estimate for -4.

The Dow Jones industrial average closed down 247 points at 11,397, the S&P 500 fell by 23 points to 1,200, and the Nasdaq lost 52 points to 2,614.

Economic leaders met in Paris over the weekend and agreed to set major rules for the euro zone rescue plan when they convene again on Oct. 23. During the weekend the chief spokesman for German Chancellor Angela Merkel brought up Germany’s dedication to the best interests of its own economy in its involvement in the rescue of the euro. “Dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled,” said Steffen Seibert, according to Bloomberg. He asserted that the crisis plan will extend “well into next year.”

Barclays trimmed its equities outlook, saying they are attractively valued now. “Despite stabilization in the U.S. macroeconomic outlook and additional monetary policy accommodation, continued public policy uncertainty and the impact of slowing earnings momentum are significant factors in our decision to cut our 2011 year-end price target to 1260 … the combination of slowing earnings growth and asymmetric risks lead to our price target reduction,” analyst Barry Knapp wrote.

Research firm Macroeconomic Advisors revised its U.S. GDP estimate for the second half of the year up to 2.7% in the third quarter and 2.5% in the fourth quarter, citing stronger than expected retail sales as one of the reasons for growth.

The Federal Reserve’s “Operation Twist” plan to boost borrowing and investment seems to be working hand in hand with moderate improvements in U.S. growth estimates. Barclays’ Knapp writes, “The bear steepening in Treasuries during the early stages of Operation Twist adds support to the view that the improving U.S. growth outlook played a significant role in the equity market rally.”

The SPDR financial sector ETF fell 3.1% Monday, as major bank shares slid into the red. Citi stock was down 1.7% at $27.93, Bank of America fell 2.6% to $6.03, and JPMorgan fell 2% to $31.25.

In Europe, Deutsche Bank shares dropped 3.1%, BNP Paribas fell 3.7%, UBS fell 3% and Barclays dropped 2%.