* European shares slip for 2nd day, track falls in Asia
* Concerns over Europe banks also spur sales of risky assets
* Euro steady against dollar but sentiment fragile
By Emelia Sithole-Matarise
LONDON, June 23 (Reuters) - European and Asian stocks fell
on Wednesday as poor U.S. home sales added to fears about the
global economic recovery and optimism over China's new flexible
yuan policy faded.
The euro held steady against the dollar but sentiment was
fragile as concerns over Europe's banking system undermined
flows into risky assets, giving support for safe-haven
government bonds.
"With advanced economies tightening their fiscal policies,
the risks of economic slowdown are rising," said Lee Hardman,
currency economist at Bank of Tokyo-Mitsubishi UFJ.
European shares fell for a second day with pan-European
FTSEurofirst 300 index <> shedding 0.8 percent by 0746
GMT.
Financial stocks were among the top losers on concerns about
the European banking setor after French bank Credit Agricole
<CAGR.PA> pushed back profit targets for its struggling Greek
unit Emporiki <CBGr.AT> and said it would take a 400 million
euro ($536.7 million) write-down as Greece fights its debt load.
[]
The benchmark European index is up more than 62 percent from
its lifetime low of March 9, 2009, as major economies return to
growth. But it is only up 0.5 percent for 2010, having stumbled
in April and May when worries about debt levels in Europe
escalated.
Japan's Nikkei share average <> closed down almost 2
percent, sliding to a one-week low and back towards a key
support level. World stocks as measured by MSCI <.MIWD00000PUS>
were 0.5 percent down.
U.S. stock futures <SPc1> rose 0.5 percent on some
bargain-hunting after the previous session's falls.
U.S. stock indexes fell as much as 1.6 percent on Tuesday,
hit by the poor housing data and the S&P 500 <.SPX> moving below
its 200 day-moving average, which has been seen as a key
technical support level for the markets' recent rally. []
U.S. RATES TO STAY NEAR ZERO PERCENT
Sales of U.S. existing homes unexpectedly fell in May,
sparking worries that the Federal Open Market Committee may
offer a less upbeat economic outlook after a two-day meeting
ends on Wednesday. []
"That is a very sensitive area because don't forget that the
whole financial crisis started with the U.S. housing market and
the last thing we want to see is a renewed weakness in the U.S.
housing market," said Mike Lenhoff, chief strategist at Brewin
Dolphin.
The Federal Reserve, in a statement due at 1815 GMT, is
widely expected to hold rates near zero and reiterate its
commitment to keeping interest rates "exceptionally low" for an
"extended period."
The dollar <.DXY> and the yen <JPY=> edged higher while the
euro <EUR=> and high-yielding currencies like the Australian
dollar <AUD=D4> were on the defensive as a recent risk rally
appeared to have run its course and the euphoria from China's
new yuan policy waned.
The euro was up 0.2 percent against the dollar at $1.2290,
having dipped to as low as $1.2244 earlier.
The fall in equities helped spur demand for U.S. Treasuries
and euro zone government bonds. Benchmark 10-year German Bund
yields <DE10YT=TWEB> was down almost four basis points at 2.660
percent while the benchmark 10-year U.S. Treasury yield was
about one basis point lower at 3.159 percent <US10YT=RR>.
Energy shares <.GSPE> were also hit as oil prices fell on
higher U.S. inventories, and after the Obama administration said
it would appeal a court decision which overturned its moratorium
on deepwater drilling in the wake of the Gulf of Mexico spill
[].
U.S. crude for August delivery <CLc1> slid 30 cents to
$77.55 a barrel.
(Additional reporting by Tamawa Desai and Atul Prakash;
Editing by Toby Chopra)
