* MSCI world equity index down 0.25 pct
* Euro hits 2-1/2 month low on banking concerns
* Oil down; bonds also weaker
By Natsuko Waki
LONDON, Dec 15 (Reuters) - The euro hit a 2-1/2 month low
against a broadly firmer dollar on Tuesday while world stocks
slipped as concerns grew about the sustainability of the euro
zone's recovery and the fiscal health of Greece.
The closely-watched ZEW survey showed German analyst and
investor sentiment fell in December for a third consecutive
month, reaching its lowest level since July and pointing to a
slowdown in the pace of recovery in Europe's largest economy.
Concerns about Austria's banking sector lingered a day after
the country took over Hypo Group Alpe Adria on Monday to avoid a
collapse.
Worries about the fiscal health of Greece weighed on local
banks <.FTATBNK> and pushed the Greek bond yield higher relative
to the safer German counterpart after Prime Minister George
Papandreou's spending cut plans announced late on Monday failed
to convince investors.
"Problems in Greece continue, and the news about the
Austrian bank yesterday hasn't helped either," said Ian
Stannard, currency strategist at BNP Paribas.
"Overall, downward pressure on the euro continues, and the
weak ZEW survey is also negative."
MSCI world equity index <.MIWD00000PUS> fell 0.5 percent
while the FTSEurofirst 300 index <> lost a third percent.
U.S. stock futures pointed were down around 0.2 percent
<SPc1>, pointing to a weaker open on Wall Street.
The dollar <.DXY> rose 0.7 percent against a basket of major
currencies to its highest in six weeks.
EURO ZONE WORRIES
The euro fell as low as $1.4527 <EUR=>, down three quarters
of a percent.
The single currency initially fell after an Austrian
newspaper reported the country's central bank and its financial
market regulator have put Oesterreichische Volksbanken
<OTVVp.VI>, the country's top cooperative bank, on a watchlist
[]
The bank's spokesman later said the report was inaccurate,
while Austria's central bank said Volksbanken stayed above legal
capital requirements in a severe stress test, adding that there
was no watchlist.
Nonetheless, the newspaper report, which did not cite
sources, fuelled concerns that European banks are in a fragile
state even after Monday's surprise announcement that Abu Dhabi
would provide Dubai $10 billion in bailout money eased concerns
about European banks which are heavily exposed to Dubai Inc.
And concerns about the Greek fiscal deficit lingered. The
10-year Greek/German government bond yield spread <GR10YT=RR>
<EU10YT=RR> widened to 257 basis points from 231 on Monday as
investors demanded higher premium to hold Greek debt.
"There is still a lot of pressure on the government to take
specific measures, especially after Ireland was perceived to
have taken drastic steps. So the risk is for spreads to widen
again," said Michael Leister, strategist at West LB in
Dusseldorf.
Emerging stocks <.MSCIEF> fell 0.5 percent.
U.S. crude oil <CLc1> rose 0.2 percent to $69.63.
Bund futures <FGBLc1> were steady on the day.
(Additional reporting by Naomi Tajitsu and Tamawa Desai)
