* Euro slips 0.4 pct ahead of euro zone finmin meeting
* Investors anxious for deal on boosting euro safety fund
* Global stocks dip; Smiths, BP keep Europe shares positive
By Jessica Mortimer
LONDON, Jan 17 (Reuters) - The euro slipped against the
dollar on Monday while global stocks dipped as hopes of swift
action from policymakers to boost the euro zone's rescue fund
faded ahead of a meeting of finance ministers.
A debate on increasing the effective lending capacity of the
European Financial Stability Facility is expected to dominate
the meeting, but concerns about whether officials can reach
agreement weighed on market sentiment. []
The euro extended falls as European Central Bank policymaker
Athanasios Orphanides was quoted saying the market may have
overreacted to the ECB's statement last week. The bank's warning
on inflation had prompted investors to bring forward bets on the
timing of a first rise in euro zone interest rates, sending the
euro to a one-month high. []
"Expectations for tighter ECB monetary policy measures
aren't going to go away. But higher rates and a cobbled together
rescue package for the euro zone aren't positive for the euro in
the long run," said Ian Stannard, senior currency strategist at
BNP Paribas.
The euro lost 0.4 percent on the day against the dollar
<EUR=> at $1.3316, having rallied some 4 percent last week to a
high of $1.3458 on Friday. Against a basket of currencies, the
dollar <.DXY> was up 0.1 percent at 79.249.
Ministers will discuss an increase in the fund, but there
was a growing realisation that a deal was not imminent, with
France saying it would be March before a firm plan was in place.
[]
"It's becoming increasingly apparent that Germany doesn't
want an increase in the rescue fund and that's weighing on euro
sentiment today because there were positive expectations
building last week," said Manuel Oliveri, currency strategist at
UBS in Zurich.
Some analysts pointed to a Feb. 4 European Council meeting
as a more likely stage for such decisions to be made, though
this week's meeting should give investors a sense of how much
agreement there is among euro zone members to enlarging the
facility.
German Bund futures <FGBLc1> were 6 ticks higher at 124.96.
They cut earlier losses while bonds of the euro zone's
peripheral issuers sold off after Spain announced a syndicated
bond sale with a target size of 4-5 billion euros.
GLOBAL STOCKS, COMMODITIES WEAK
The MSCI world equity index <.MIWD00000PUS> was down 0.1
percent at 337.13, off a 28-month high of 337.68 touched
overnight as last week's rally petered out.
With U.S. markets closed on Monday, the focus was on events
in Europe, with news that Spain was opting for a syndicated sale
of its debt instead of an open auction driving its bond yields
back up after a recovery in recent sessions.
European shares <>, however, edged up 0.1 percent,
lifted by gains in oil shares and a surge in British engineering
firm Smiths Group <SMIN.L> after it rejected a bid for its
medical services unit, which offset falls in mining stocks.
Oil stocks were led higher by BP <BP.L> following the share
swap and arctic exploration deal that the London-based oil major
signed with Russia's Rosneft <ROSN.MM> late on Friday.
Commodity prices were broadly lower on a firmer dollar and
ahead of the euro zone meeting.
U.S. crude oil <CLc1> was down 30 cents at $91.24 a barrel,
while ICE Brent for March <LCOH1> lost 37 cents to $98.01,
staying not far below $100, a level not seen since the beginning
of October 2008.
"The oil price has been in an uptrend since the middle of
November and now we are getting close to $100. The weather in
the northern hemisphere has turned a bit milder, and the end of
winter is in sight. It's either pausing or going to retrace,"
said Christopher Bellew at broker Bache Commodities.
Copper prices <CMCU3> were lower, though gold prices held
steady around $1,359.80 an ounce, underpinned by physical buying
ahead of the Chinese new year.
(Additional reporting by Neal Armstrong and Claire Milhench;
editing by Patrick Graham)
