* Greenback hits 10-month high vs euro, others
* Greece in focus as EU leaders meet
* World stock flat, weakened by emerging markets
By Jeremy Gaunt, European Investment Correspondent
LONDON, March 25 (Reuters) - The dollar rose to a 10-month
high against the euro and a basket of other major currencies on
Thursday before slipping back slightly, as jitters over euro
zone debt combined with a general flow towards relative safety.
World stocks as measured by MSCI <.MIWD00000PUS> were flat,
with gains in Europe offset by weak emerging markets.
Investors continued to show concern about stability in the
euro zone on the back of ongoing Greek troubles and Wednesday's
downgrade of Portuguese debt.
Diplomatic efforts continued ahead of a European Union
summit to start on Thursday after they failed on Wednesday
failed to bridge differences over whether to offer a safety net
to Greece. []
The euro has been punished by uncertainty engendered by what
comes down to a fight about whether one euro zone country should
bail out another.
The single currency recovered slightly to $1.3330 <EUR=>
after hitting a low of $1.3285 in Asian trading.
"Short-term speculators are probably all short on the euro,
but there are long-term investors who are patiently holding
back," said Kazuyuki Takami, senior manager of foreign exchange
trading at the Bank of Tokyo-Mitsubishi UFJ.
"But depending on the developments, those long-term
investors could also start dumping the currency, taking it
further and further down," he said.
Dubai's debt issues were also in focus again after the
emirate's government said it would support the restructuring of
debt-laden state-owned firm Dubai World and its Nakheel
subsidiary by providing $9.5 billion in new funding.
Euro zone government bond prices were slightly lower,
catching up with moves in the U.S. Treasury market which sold
off late the previous session after poor demand in a five-year
note auction.
EMERGING UNDERPERFORMANCE
European shares edged up, helped by oil majors gaining as
commodity prices eased off lows.
The pan-European FTSEurofirst 300 <> index of top
shares was up 0.1 percent at 1,076.38 points.
But emerging market shares <.MSCIEF> were down nearly a
quarter of a percent.
Despite continually being cited as a favourite by
institutional investors, emerging market shares have
underperformed this year and the MSCI benchmark is barely in
positive territory.
Some investors may be pulling back because of concerns that
too much money is chasing too few assets could create a
short-term bubble. []
Earlier, Japan's Nikkei closed up 0.02 percent <>.
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope)
(editing by John Stonestreet)
