The euro slid to a 2-1/2-year low against the yen on Monday as investors shifted their focus to banking problems in Europe after leaders of Europe's four biggest economies decided against a coordinated bank bailout.

Traders said the failure of European leaders to come up with a unified plan dealt a big blow to investor confidence and stirred more worries about the troubles plaguing the global financial system, prompting heavy selling of risky positions in carry trades and stocks.

The euro shed 1.1 percent at $1.3617 after plumbing a 13-month trough of $1.3595 on trading platform EBS. The single currency slid 3 percent to 140.46 yen and struck a 2-1/2-year low of 139.96 yen.

The Australian dollar plunged more than 5 percent against the yen at one point to a four-year low as investors were forced to dump long-standing carry trades favouring higher-yielding currencies.

Japanese investors, including institutional ones such as life insurers and commercial banks, were seen repatriating some of their hefty overseas assets as they sought the shelter of moving money back home, traders said. Japanese retail margin traders were also seen as big forced sellers of the Aussie.

Market players said many investors around the world are spooked by the damage to the financial system and only want to deal with banks considered the very safest in the deepening crisis that has claimed institutions on both sides of the Atlantic.

Stock markets around Asia tumbled between 4-5 percent.

"It's just people taking risk off the table," said one trader at a European bank in Tokyo. "All unwinding and de-leveraging."

German and French officials denied on Sunday that they were set to endorse a common fund to bail out European banks. The comments came after European leaders issued a joint statement after a summit in Paris that made no mention of a fund.

But the troubles in Europe were made clear after the German government and banks were forced to come up with a new rescue package for mortgage lender Hypo Real Estate over the weekend.

Germany and Denmark also issued a guarantee on bank deposits, while Iceland said a bank stability plan was in the works. -Reuters