Europe's backlash against austerity gained momentum, in a challenge to German Chancellor Angela Merkel's budget-cutting prescriptions for resolving the debt crisis.

French President Nicolas Sarkozy lost the first round of his re-election bid and a revolt against extra spending cuts in the traditionally budget-conscious Netherlands propelled Prime Minister Mark Rutte's coalition toward an early breakup.

Together with anti-austerity rumblings in a campaign for elections in Greece, the shift in grass-roots sentiment at the heart of Europe generated fresh doubts about the German-driven strategy for getting to grips with the two-year-old crisis.