* The euro rises on Greece's tough austerity measures
* Greece's borrowing costs ease
* European shares slip; World stocks up for 4th day
By Dominic Lau
LONDON, March 3 (Reuters) - The euro rose and Greek
borrowing cost fell to their lowest level since mid-February
after a source said the Greek cabinet had agreed on steps to
rein in the deficit, seen as crucial to winning EU financial
support.
European shares, however, drifted lower as traders said most
of the news had been priced in and ahead of U.S. jobs data,
though world stocks drifted higher, on track to gain for the
fourth consecutive day and near their five-week high.
A government source said Greece's cabinet decided on
Wednesday to take extra austerity measures totalling 4.8 billion
euros ($6.49 billion) to ensure it meets key fiscal targets this
year. []
In the commodity market, copper prices <MCU3> pulled back
from a six-week high hit on Monday as Chile's production
returned to normal after a massive earthquake over the weekend,
thought crude <CLc1> and gold <XAU=> prices firmed as dollar
<.DXY> slipped.
Investors also awaited the U.S. ADP Employment Report for
February and Challenger U.S. jobs cut for February ahead of the
all important non-farm payrolls on Friday.
"There is still some cautiousness in the market.
Macroeconomic data hasn't been that great lately and people are
afraid that some of today's economic numbers may come out lower
than expected," said Koen De Leus, economist at KBC Securities.
"But I have an impression that optimism has returned and a
lot of investors are now pretty confident that the problems in
Greece are going to be solved."
Earlier, ratings agency Standard & Poor's said it is less
pessimistic on Greece's debt crisis than financial markets and
believes that debt problems of some euro zone countries pale in
comparison with long-term challenges of population ageing.
[]
World stocks measured in MSCI All-Country World Index
<.MIWD00000PUS> advanced 0.2 percent, gaining for the fourth
day. The index is down 1.6 percent this year after rebounding
more than 31 percent in 2009.
The pan-European FTSEurofirst 300 <> index dipped 0.1
percent after gaining 0.8 percent on Tuesday, while Greece's
share benchmark <> added 0.1 percent.
Japan's Nikkei average <> put on 0.3 percent.
EURO FIRMS
The euro gained nearly 50 ticks to around $1.3663.
"The measures are largely positive as they are at the upper
end of speculation ... so the euro is seeing a slight rally,"
said Elsa Lignos, currency strategist at RBC.
But some analysts said support for the euro could be limited
as Greece still faced the hurdle of attracting demand for a
10-year debt sale expected soon as the country clamours for
funds to refinance its debts.
"The sale will be the big test for the euro," said Antje
Praefcke, currency strategist at Commerzbank in Frankfurt.
The premium investors demand to buy 10-year Greek government
bonds <GR10YT=RR> rather than benchmark German bunds fell to 291
basis points from 305 bps at the European settlement close on
Tuesday. Last week, the spread was as wide as 371 bps.
Yields on other "safe-haven" bonds drifted higher. The
10-year Bund <EU10YT=RR> was up 2 basis points at 3.127 percent,
while 10-year U.S. Treasuries <US10YT=RR> were 1 basis point
higher at 3.621 percent.
(Additional reporting by Atul Prakash, Naomi Tajitsu, George
Matlock and Ian Chua in London; Editing by Toby Chopra)
