Euro dips, shares pare gains on Greek aid unease

Wed Feb 15, 2012 8:30am EST
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By Richard Hubbard

LONDON (Reuters) - The euro dipped and a share market rally ran out steam Wednesday on signs euro zone officials might delay Greece's next rescue package, while still avoiding a disorderly default.

The single currency eased 0.3 percent, falling back below $1.31 after EU sources said euro zone finance ministers were not satisfied all Greece's political parties were committed to fresh austerity measures and might withhold bailout funds until April.

European shares shed some of their gains though U.S. futures still pointed to a higher opening on Wall Street, with the release of January factory output and capacity utilization figures later in the day expected to add to signs of economic improvement.

Riskier assets like equities had resumed their rally earlier Wednesday on hopes a growing flood of money from major central banks will support growth as data showed the euro zone's debt-laden economy headed - as expected - for a recession.

Sentiment was also supported by promises by Chinese leaders to keep investing in euro zone debt.

The euro fell to $1.3084, retreating from a session high of $1.3191 and well off the February 9 peak of $1.3322.

Economic output in the 17-nation euro area fell a widely-expected 0.3 percent in the last three months of 2011 compared to the previous quarter, and is likely to contract further in the current quarter to mark its second recession in three years.

But the French economy posted a surprise expansion in the last quarter of 2011 and a slowdown in Europe's biggest economy, Germany, was not quite as bad as expected.   Continued...

Traders work at their desks in front of the DAX board at the Frankfurt stock exchange February 2, 2012.  REUTERS/Alex Domanski