GLOBAL MARKETS-Euro recovers, shares fall on earnings jitters

                                
 * Dlr retreats after overnight surge, Asian stocks slide
                                
 * Euro recovers losses after Pakistan dismisses coup rumour
                                
 * Gold stabilises after overnight fall
                                
 * European stocks set for steady opening
                                
 By Susan Fenton
                                
 HONG KONG, Dec 18 (Reuters) - The euro recovered from early
losses on Friday after Pakistan dismissed rumours of a coup
while Asian stocks fell as investors fretted about the outlook
for corporate earnings.
                                
 European shares were set to open steady, according to
financial spreadbetters, while U.S. equity futures were up 0.4
percent.
                                
 The dollar <.DXY> eased 0.2 percent against a basket of
major currencies, pulling back from an overnight rally as
investors unwound long dollar positions ahead of the year-end.
                                
 Greece's fiscal woes continued to weigh on the euro <EUR=>
but the currency found support after Pakistan dashed rumours of
a coup, which in early trade had sent it skidding to a
nine-month low against the safe-haven Swiss franc <CHF=>.
                                
 By the afternoon the euro was up 0.3 percent at $1.4380,
rebounding from a three-month low of $1.4304 on Thursday.
                                
 Pakistani President Asif Ali Zardari said there was no
coup, dousing rumours that started after a government minister
suspected of corruption was barred from leaving the country.
[ID:nSGE5BH00M]
                                
 Asian stocks slipped as investors became cautious about
companies' earnings prospects and shares of resources companies
were sold in reaction to an overnight drop in the price of
gold.
                                
 "We have already suggested that investors may be setting up
for portfolio readjustments heading into the new year, and
still believe we could see gold tumble considerably further
before the year is done," Investec Bank (Australia) Ltd said in
a research note.
                                
 The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS>, which has rallied more than 60 percent this
year, was 0.6 percent lower.
                                
 In Japan, the Nikkei share index <.N225> dipped 0.2
percent, paring most early losses and the five-year government
bond yield slid to a four-year low after the Bank of Japan said
it would not tolerate deflation, suggesting further monetary
easing was possible. [ID:nTOE5BH03R]
                                
 TELSTRA TUMBLES
                                
 Asian resources stocks were hit after gold fell 3 percent
in New York while banking shares, including HSBC <0005.HK>,
lost ground after international regulators proposed tough new
capital protection rules from 2012. [ID:nWEA6017]
                                
 HSBC shares in Hong Kong fell 1 percent, extending a 3.5
percent slide in London.
                                
 The gold price <XAU=> stabilised, rising to $1,105 an ounce
from a New York close at $1,097.80, but is about 10 percent
below a record high of $1,226.10 reached on Dec. 3.
                                
 Oil <CLc1> meanwhile edged up 0.4 percent to $72.96 a
barrel, supported by positive U.S. factory activity data.
[ID:nN17380585]
                                
 Asian equity investors are likely to remain cautious next
week as they seek to hold onto stellar gains this year.
                                
 Nouriel Roubini, one of the few economists to have
accurately predicted the magnitude of the global financial
crisis, warned that global markets have rallied "too much, too
soon, too fast".
                                
 However, he said an imminent correction was unlikely
because a cheap dollar would continue to encourage investors to
seek higher-yielding assets for a few months. [ID:nN17196911].
Roubini sees a dollar rebound in 6-12 months.
                                
 In Australia, shares of phone company Telstra <TLS.AX>
tumbled 3.4 percent after the company cut its sales revenue
forecast [ID:nSYU009176].
                                
 The country's biggest brewer, Foster's Group <FGL.AX>, saw
its shares drop nearly 2 percent after warning that a strong
Australian dollar <AUD=> and weak U.S. demand would cut profits
at its wine business. [ID:nSGE5BG0J7]
                                
 Some analysts have warned that investors of Australian
equities have not sufficiently priced in the impact of the
Aussie dollar's 40 percent surge this year.
                                
 "It's been pushed to the back of people's minds, but the
currency is certainly coming home to roost. It is adding to the
nervousness in our market," said Daniel Manley, a dealer at
Burrell & Co in Australia.
  (Additional reporting by Victoria Thieberger in MELBOURNE
and
 Miho Yoshikawa in TOKYO; editing by Kazunori Takada)
 (susan.fenton@thomsonreuters.com; +852 2843 6367; Reuters
Messaging: susan.fenton.thomsonreuters.com@reuters.net)