Global shares, euro moves checked as Greek deal awaited

Tue Nov 20, 2012 8:16am EST
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By Richard Hubbard

LONDON (Reuters) - World shares and the euro steadied on Tuesday after an initial fall in reaction to France losing its top-notch credit rating from Moody's, with shares maintaining sharp gains from the previous day as investors await a deal for Greece.

Euro zone finance ministers and the International Monetary Fund meet later in the day and are expected to approve a plan to give Greece 44 billion euros ($56.4 billion) in aid by December 5, which is needed to stave off bankruptcy.

The likely resolution of the short-term funding problems for Greece and optimism that U.S. lawmakers would reach a deal to avert automatic tax hikes and spending cuts have been behind a sharp rally in riskier assets this week.

MSCI's world equity index gained 2 percent on Monday to post its best day since July 27, and held onto those gains by the midsession on Tuesday to be virtually unchanged at around 326.60 points .MIWD00000PUS.

U.S. stock futures pointed to a slight retracement when trading resumes on Wall Street but this comes after the broad S&P 500 .SPX added over 2 percent in the last two sessions.

Attention in the United States is likely to be firmly focused on efforts by Congress to reach a compromise to avoid $600 billion in tax increases and spending cuts due to start in January, widely referred to as the "fiscal cliff". .N

"The fiscal cliff is the main headline and that will be what will lead the markets for the next couple of days, particularly with a short week in the U.S.," said Brenda Kelly an analyst at IG Markets. U.S. markets will close on Thursday for the Thanksgiving annual holiday.

Investors are also waiting to hear from the Federal Reserve Chairman Ben Bernanke, who speaks before the Economic Club of New York at 1715 GMT, as he may offer fresh insight in the central bank's appetite for more monetary stimulus.   Continued...

A trader checks screen data at the IG Index trading floor in London, December 9, 2011. REUTERS/Finbarr O'Reilly