On Monday European stocks dropped as Germany and France disagreed on when to introduce a banking union for the euro area and a report added to concern about the strength of China’s economy. U.S. index futures and Asian shares fell.

The Stoxx Europe 600 Index retreated 0.7 percent to 273.85 at 11:04 a.m. in London as metal producers, banks and construction companies slipped.

German Chancellor Angela Merkel rejected French President Francois Hollande’s appeal to activate oversight of the banking union “the earlier, the better.” The deadlock over regulation may delay into next year a key building block in resolving the single currency’s debt crisis.

Speaking at a meeting on the 22nd September near Ludwigsburg, Germany, Merkel said that the proposed banking union “has to be thorough, the quality has to be good and then we’ll see how long it takes.”

In China, manufacturers and retailers are less optimistic about sales than they were three months ago and are cutting jobs, according to the findings of a survey by New York-based researcher CBB International LLC. Previous economic reports showed that manufacturing, trade and retail sales slowed in the third quarter. That pointed to a seventh straight deceleration in quarterly growth and potentially the weakest annual expansion for the world’s second- largest economy in 22 years.

Stocks extended their drop today after German business confidence unexpectedly fell for a fifth-straight month in September to the lowest reading since February 2010.

Japanese stocks fell, with the Nikkei 225 Stock Average close to erasing its gain this quarter, on concern that the outlook for exporters is dimming amid slower growth in China and squabbling by European policy makers. The Nikkei 225 Stock Average fell 0.5 percent while the Topix Index lost 0.4 percent.

Goldman Sachs Group Inc. forecasts an 18.2 percent return from commodities in the next 12 months, with energy and industrial metals leading the way.