* Share rally fizzles out in technical tug-of-war
* Euro slips after falling to break key resistance
* Japan's Nikkei falls 0.7 percent
* Poll points to U.S. growth pulling away from Europe, UK
* Oil down as gold edges up
By Alex Richardson
SINGAPORE, June 17 (Reuters) - Asian shares fell and the
euro slipped on Thursday as short covering rallies ran out of
steam, but some analysts said global markets may have finally
found support after a heavy selloff in May.
European shares were expected to eke out small gains, with
financial spreadbetters calling London's FTSE 100 <> to
open up 0.2 percent. []
But concerns about the euro zone's fiscal frailty lingered.
"We're much happier over here in Asia, but we don't live in
our own world," said Nicholas Yeo, head of China/HK equities at
Aberdeen Asset Management. "What happens in the West will
affect Asia."
Oil, which has been tracking moves in the euro and stock
markets, fell back from a six-week high, while gold, which
tends to gain from falling share markets due to its safe haven
appeal, firmed to near its highest in a week. [] []
"Players think the euro's rise, led by short-covering, has
come to a near-term end," said an FX trader at a major Japanese
brokerage.
Japan's Nikkei share average <> fell 0.7 percent,
after five days of gains had brought it to one-month highs,
while MSCI's index of Asian shares outside Japan
<.MIAPJ0000PUS> eased 0.1 percent.
"There seems to be a double bottom forming in a number of
global stock markets," said Hiroichi Nishi, general manager at
the equity division of Nikko Cordial Securities in Tokyo.
Such a technical pattern on price charts could indicate
that stocks are poised to move higher, but investors remain
wary after a nerve-wracking slump in global financial markets
since mid April.
U.S. stocks ended flat on Tuesday after mixed economic data
and a cautious outlook from bellwether FedEx Corp <FDX.N>. []
But the S&P 500 <.SPX> held above its 200-day moving
average, seen by many market players as a key momentum
indicator, a day after breaking above that mark for the first
time in a month.
World stock markets had been gaining for the best part of a
week, partly on a technical rebound from heavily oversold
levels and partly as many investors took a relatively positive
view of the global economy -- and hence corporate earnings
prospects -- with the risk of a "double dip" recession seen as
easing.
A Reuters poll published on Wednesday showed a continuing
divergence in the expected rate of recovery among the world's
richest nations, with Europe's debt crisis continuing to hamper
economies across the continent. []
The growth path for 2010 in the United States, the world's
largest economy, has been revised higher, running away from the
euro zone and Britain and also outstripping Japan, according to
surveys of over 250 economists taken June 10-16.
A separate Reuters sentiment survey on Thursday showed
Asia's top companies at their most optimistic in five quarters,
as robust economic growth in the region outweighs concerns
about debt problems in Europe and the recent surge in market
volatility. []
EURO STUMBLES
A bigger-than-expected fall in U.S. housing starts among
Wednesday's data pared gains in high yielding currencies such
as the Australian dollar <AUD=D4>, which eased from a 1-month
high.
The euro <EUR=> fell back from a two-week high to trade
around $1.2275. []
After failing to break above $1.2350-55 twice in the past
48 hours, the euro is at risk of retreat to around $1.2175, a
38.2 percent retracement of its rebound from a four-year low
below $1.19 set last week, traders said.
The market will be watching a Spanish bond auction later in
the day after the spread of Spanish government bond yields over
benchmark Bunds soared to a euro lifetime high on Wednesday.
"In the past few sessions, rises in the credit spreads of
euro zone countries have not led to euro selling as much as
before," said Junya Tanase, senior strategist at JPMorgan Chase
Bank.
"But unless conditions in Europe improve, correlation will
return."
EU leaders will meet on Thursday to review the findings of
a task force set up to look at reforms designed to prevent a
repeat of the euro zone debt crisis. They will also discuss the
creation of a permanent aid mechanism for countries in debt
trouble. []
The leaders have agreed on a 500 million-euro ($617.2
million) safety net to help struggling countries that use the
euro and a 110-billion-euro aid mechanism for Greece. But
despite repeated denials, they have not allayed concern that
Spain will follow Greece by seeking financial help.
European Central Bank executive board member Joseph Manuel
Gonzalez-Paramo said in an interview published in a German
paper on Thursday that the central bank would continue buying
government bonds until markets have stabilised. []
U.S. crude futures fell 0.9 percent to $76.95 a barrel as
investors took profits from oil's recent rally.
Oil has rebounded from a 2010 low of $64.24 on May 20.
Sentiment improved further after the S&P 500 rose above its
200-day moving average on Tuesday, helping push NYMEX crude
above its own 200-day moving average.
Spot gold <XAU=> was bid at $1,233.45 an ounce, up from its
New York notional close on Wednesday, when it had touched a
one-week high around $1,237.
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge
Fund Blog Hub click on http://blogs.reuters.com/hedgehub)
