LONDON (Reuters) - European shares hit a one-week low and the euro fell as riskier assets bore the brunt of fears that the global growth outlook is darkening and that Greece may not be able to complete a major debt restructuring deal.
These concerns look set to spread to U.S. stocks, with major indices poised to open lower despite more positive data on the giant American economy on Monday and hopes that this week's nonfarm payrolls report for February will show a rise in new jobs.
"The market has become sanguine about the U.S. recovery prospects and if the jobs data on Friday is bad then there will be a rush for the door," said Nick Beecroft, senior markets consultant at Saxo Bank.
China's lowering of its economic growth target and data pointing to Europe possibly slipping back into recession have slowly eroded the optimism on global markets generated by the European Central Bank's huge injection of loans to banks since December.
"We've had the ECB bathe us in this warm glow of liquidity but politically there is a lot more to be done, and there is still a risk that tensions could rise again into the spring and summer," said Rabobank's senior currency strategist Jane Foley.
The possibility of Europe falling into recession was highlighted on Tuesday when statistics agency Eurostat said economic euro zone output fell by 0.3 percent in the fourth quarter of 2011, compared to the previous three months.
Leading indicators for the current quarter have signaled further weakness since the start of the year.
There are also signs the growth worries are spreading to the corporate sector, with shares of major car makers dragging the FTSE Eurofirst .FTEU3 index of top European shares down 1.4 percent at 1,065.17 points, its lowest level in over a week.
"The economic climate is not what we thought it would be, and we need to adjust to the new economic realities," General Motors vice president of corporate strategy Stephen Girsky said at an industry gathering in Geneva.
The Dow Jones STOXX Autos index .SXAP, was down 2.6 percent, led by French car maker PSA Peugeot Citroen (PEUP.PA) after it announced a planned 1 billion euro capital raising would involve a deep share price discount.
Fears have also begun to rise again over whether Greece will successfully complete a private sector debt swap by late Thursday to release a 130 billion euro second bailout and meet bond repayments due by March 20 which would avoid a messy default.
Any disorderly Greek default would probably leave Italy and Spain needing outside help to stop contagion spreading and cause more than 1 trillion euros ($1.3 trillion) of damage to the euro zone, the group representing private bond holders warned in a document seen by Reuters.
"This week will determine the success or otherwise of the largest sovereign bond restructuring in history," said Bill O'Neill, chief investment officer for EMEA at Merrill Lynch Wealth Management.
The euro was hobbled by all the uncertainty over the Greek bond swap and fell to $1.3125, its weakest since February 17.
The growing worries over the Greek debt swap drove demand for safe-haven German government bonds and hit peripheral euro area debt. Without the additional rescue funds agreed by euro zone finance ministers on February 21, Greece will be unable to make billions of euros of bond payments falling due this month.
The front-month German Bund futures contract rose 37 ticks from the previous close to 140.20, after setting a record high of 140.39 during the day on Monday.
Spanish 10-year bond yields rose back above the 5 percent barrier, climbing 8 basis points to 5.07 percent. The Italian equivalent rose six basis points to hit 5.0 percent, continuing to fare better than Spain.
"The market is really now looking at, on one side, what will happen to Greece, and on the other, the details of the next macro data releases to get an idea of growth in the second half of this year," said Alessandro Giansanti, strategist at ING.
Euro zone GDP and PMI: link.reuters.com/rap94s
Global services activity: ttp://link.reuters.com/dyh85s
Euro zone crisis in graphics: r.reuters.com/hyb65p
China's weaker growth outlook saw stocks there and in Japan fall for a second day and triggered weakness in Australian resource shares, sending the MSCI world equity index .MIWD00000PUS down 0.8 percent to 327.15.
In oil markets Brent crude traded around $123 in a volatile market as fears of a disruption to supplies from the Middle East battled with the prospect of demand falls from slowing economies in China and Europe.
Front-month Brent crude fell 60 cents $123.20 a barrel at one point after climbing to a day's high of $124.39. U.S. April crude fell 50 cents to $106.22.
The commodity-linked Australian dollar slipped 0.5 percent to $1.0621, as the nation's central bank held its cash rate steady at 4.25 percent for a second month, but left the door open for an easing should the economy materially.
The New Zealand dollar also hit a near 6-week low of US$0.8122, down 1 percent on the day.
Additional reporting by Atul Prakash; Editing by Hugh Lawson