European Shares Trim Losses

Reuters

European stocks, the euro and oil trimmed losses on Friday as investor appetite for risk grew on hopes that Greek political parties would form a new government, offsetting concerns about global growth sparked by poor Chinese data.

The FTSEurofirst index of top European shares trimmed earlier losses led by a shock trading loss at JPMorgan that hit the banking stocks, to be 0.4 percent lower at 1015.41 points by 0910 GMT.

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The MSCI world equity index was still on course for a second weekly loss of over 2 percent, while emerging equities were set for their biggest weekly loss since November, having fallen more than 4 percent this week as investors dropped riskier assets.

Markets have been alarmed that anti-austerity votes in Greece and France could drag the euro zone back into the danger zone after cheap central bank loans and plans for bigger bailout funds had appeared to help the bloc avoid the worst.

The euro strengthened to move off a fresh 3-1/2 month low of $1.2905 hit earlier in the session after Greek conservative leader Antonis Samaras raised hopes that a coalition deal could be reached soon.

The common currency last traded at $1.2949.

Markets are also waiting to hear how Spain aims to shore up the country's lenders, which could send shares lower if its plans disappoint.

"Big day for Greece, Spain, the euro and the U.S. banking sector. Overnight news with even JPMorgan not able to control its traders will mean further regulation and lower profits," said Lex van Dam, hedge fund manager at Hampstead Capital, which manages $500 million of assets.

Brent crude futures climbed off earlier losses of more than$1 a barrel which had been fuelled by fears of a deepening global slowdown after China reported that industrial production from its huge factory sector had weakened sharply in April.

Brent crude June was at $111.86, off lows of $111.40 a barrel.

Gold, often seen as a safe haven commodity, was on track for its worst weekly fall since March, having suffered in this week's broad sell-off. Spot gold hit a four-month low earlier in the session and last traded around $1578.60 an ounce.

The leaders of Greece's once-dominant political parties are making a last push to form a coalition and avert a new election, which a poll showed would all but wipe them out and give victory to a radical leftist who rejects an EU bailout.

"The Greek political situation, the Spanish banks' problems and now the souring risk dynamics are all negative for the euro," said Jeremy Stretch, head of currency strategy at CIBC World Markets.

The Spanish government is expected to present new reforms to clean up its ailing banking sector after effectively taking over one of the country's biggest banks, Bankia earlier this week.

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