* European shares shake off losing streak
* Japanese shares at near three month closing low.
* Investors seek less risky currencies, dollar climbs
By Jeremy Gaunt, European Investment Correspondent
LONDON, Jan 26 (Reuters) - Deepening gloom about the world's
economy and banking system drove investors away from riskier
currencies on Monday but European shares tried to shake off a
five-day losing streak.
The pan-European FTSEurofirst 300 index <> was up 0.5
percent after losing on 12 of the past 13 sessions. The index
lost 5.4 percent last week and is down around 8 percent for the
year-to-date.
Earlier, Japan's Nikkei <> stock average hit a nearly
three-month closing low, sliding 0.8 percent on earnings.
"It's damp and blustery out there," said Justin Urquhart
Stewart, investment director at Seven Investment Management,
noting the continuing announcements from large firms about job
losses.
Corporate earnings have become the latest in a stream of
concerns among investors.
Thomson Reuters proprietary research shows that the fourth
quarter 2008 earnings growth rate for the S&P 500 <.SPX>
declined to -28.1 percent from -20.2 percent during the
past week due primarily to lower than expected earnings from a
number of companies in the Financials sector.
Seven of the 10 sectors in the S&P 500 are looking at a
year-over-year decline in earnings, which is the highest number
of sectors recording negative growth since the fourth quarter of
2001.
Governments, in the meantime, are still struggling to get
their stimulus plans to work.
U.S. President Barack Obama's top economic adviser, Lawrence
Summers, did not rule out that more money may be needed to
stabilise the U.S. financial system, as Obama sought at the
weekend to build public support for an $825 billion economic
recovery plan.
The Federal Open Markets Committee (FOMC) meets on Tuesday
and Wednesday, with the market awaiting signs of how the Fed
will help the broader U.S. economy -- and by extension, the
world -- now its main monetary tool, the fed funds rate, is set
to remain in a range of zero to 0.25 percent.
LESS RISK
On currency markets, the euro and sterling remained under
pressure as concerns about the global economy and banking sector
problems prompted investors to seek the dollar and yen,
perceived as safer assets.
The euro was near six-week lows against the dollar and
sterling hovered near 23-year lows.
"The major themes continue to be strains in the financial
sector, and currencies still take their cue from financial
stocks," said Lee Hardman, currency economist at Bank of
Tokyo-Mitsubishi UFJ.
The euro was down 0.2 percent at $1.2964 <EUR=>. Against the
yen, it was up 0.1 percent at 115.44 yen <EURJPY=R>, reversing
early losses. The single currency hit a seven-year trough of
112.08 yen last week.
Sterling was down 0.8 percent at $1.3700 <GBP=>. The pound
hit a 23-year trough of $1.3500 on Friday.
Euro zone government bonds fell ahead of a busy week for new
issuance.
Two-year euro zone government bond yields <EU2YT=RR> were
9.1 basis points higher at 1.536 percent, having hit a record
low of 1.348 percent on Friday, helping drive the 2/10-year
yield curve to its steepest since mid-2004.
Ten-year yields <EU10YT=RR> were up 3.6 basis points at
3.270 percent.
(Additional reporting by Charlotte Cooper and Tamawa Desai;
Editing by Toby Chopra)
