* Greek crisis and contagion fears hit markets
* Global stocks fall, emerging markets lead the way
* Euro at 14-month low against dollar
By Jeremy Gaunt, European Investment Correspondent
LONDON, May 5 (Reuters) - World shares fell and the euro
took another battering on Thursday in what is shaping up to be a
major flight to safety by investors fearful that the Greek debt
crisis is gaining momentum.
Emerging markets, many of which are in good economic shape
and relatively removed from euro zone stress, were particularly
hard hit, with shares <.MSCIEF> down 1.75 percent and sovereign
debt spreads widening.
MSCI's all-country world stock index <.MIWD00000PUS> was
down 0.8 percent.
Europe's FTSEurofirst 300 <> index was down a third of
a percent for a roughly 4 percent weekly loss to date, on track
to be the worst in more than a year.
Japan's Nikkei <> tumbled more than 3 percent, catching
up with other bourses after a three-day holiday.
"There's no let-up in concerns that the euro zone debt
crisis could continue to worsen and as a result equity markets
across the globe remain under pressure," said Ben Potter,
analyst at IG Markets.
"The bull market always had to end somewhere and it looks
like this could be the trigger."
Focus was on a meeting of the European Central Bank, which
is expected to leave interest rates unchanged but will almost
certainly have to address the crisis, which saw deadly riots in
Athens on Wednesday and pressure building on Spain, Portugal and
others.
"The ECB president will have to justify his recent decision
to accept Greek bonds indefinitely as collaterals regardless of
their credit rating," Brown Brothers Harriman said in a note.
"This has also raised speculation that the ECB may start
outright purchases of euro zone government bonds," it said,
adding that this was unlikely.
EURO TROUBLE
The euro tumbled to a 14-month low against the dollar with
the ECB meeting very much in sight.
European policymakers have warned the euro's survival
depends on a life-support package for Greece agreed last
weekend. This has ratcheted up risk aversion and boosted
safe-haven demand for the dollar, pushing it to a one-year high
versus a currency basket.
"The driver remains concerns about the European situation,
coupled with poor risk sentiment," said Kasper Kirkegaard,
currency strategist at Danske in Copenhagen.
The euro fell as low as $1.2737 according to electronic
trading platform EBS, its weakest since March 2009. Traders
cited selling demand from Asian central banks in early European
trade.
The common currency was down across the board, plumbing a
one-year low against the yen of 118.85 yen <EURJPY=R> on EBS,
while sliding to lowest against sterling <EURGBP=D4> since
August 2009.
Euro zone government bond yields were flat, with investors
focusing on the ECB meeting and heavy debt supply.
(Additional reporting by Naomi Tajitsu; editing by John
Stonestreet)
