Euro, European shares stabilize as Greek outcome awaited

Wed Mar 7, 2012 7:32am EST
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By Richard Hubbard

LONDON (Reuters) - European shares steadied after two days of losses and the euro recovered from a 3-week low on Wednesday as markets await the outcome of the Greek debt restructuring deal, while worrying over the weaker outlook for the global economy.

U.S. stock futures pointed to a recovery on Wall St after steep declines in the previous session.

With stimulus measures from the world's major central banks mostly on hold, growth is key to supporting the recent rally in riskier assets but recent data has disappointed.

Germany announced factory orders in January posted a surprise fall as demand slumped from outside the euro zone, adding to concerns about a slowdown in Brazil, Australia and China, though these regions are still experiencing growth.

"The reality of slower growth in the BRIC countries and the continuing threats from the situation in Europe with Greece and other fiscal problems are starting to weigh on the market," Nic Brown, head of commodity research at Natixis said.

The weaker data puts the focus firmly on the strength of the U.S. economic recovery, with the release of key U.S. nonfarm payrolls due at the end of the week.

"Given the fact that we are all waiting for the Greek (debt) deal, risk appetite is unlikely to pick up much, especially given U.S. payrolls data on Friday is coming up," said Melinda Burgess, currency strategist at RBS.

Equities and commodities and growth linked currencies all suffered a major sell-off on Tuesday on worries over the growth outlook and the prospects for a successful Greek debt deal, but prices have since either steadied or recovered slightly.   Continued...

Traders talk in front of a screen showing an index at Madrid's Bourse February 14, 2012. REUTERS/Sergio Perez