* Euro steadies after Spain downgrade; still under pressure
* Euro on track for 7.7 pct decline in May vs. dollar
* Asian stocks mixed; heading for worst month since Oct
2008
* Manufacturing data from major economies, U.S. jobs
awaited
By Vikram S Subhedar
HONG KONG, May 31 (Reuters) - The euro steadied on Monday
but remained under pressure after Fitch downgraded Spain's
credit rating and France said keeping its top credit rating may
be a stretch without tough budget cuts.
The European single currency <EUR=> is on track for a hefty
7.7 percent drop against the dollar in May on worries that
Greece's debt crisis will spread to other countries in the euro
zone, potentially derailing the global economic recovery.
May's decline would be the euro's sixth straight monthly
fall and its biggest percentage drop since January 2009.
European shares were expected to open slightly higher,
tracking modest gains in Asia, but trade was likely to be thin
with U.S. and UK markets closed for holidays.
Asian stocks outside of Japan rose 0.3 percent but looked
set to post their worst month since October 2008 as Europe's
sovereign debt woes prompted investors to dump riskier assets
such as equities and commodities.
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^ For a Reuters Insider show on Asian stock markets'
performance in May, click on http://link.reuters.com/tap37k
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^ "The market is susceptible to negative news and small
rallies in the euro on short-covering don't last for long,"
said a trader at a Japanese bank.
"This jitteriness in the market is likely to continue for a
while, and it is difficult to see a recovery in market
sentiment as there are worries that further bad news about
southern European countries may come out," he said.
EURO STEADIES
The euro was steady at $1.2282 <EUR=>, staying above a
four-year low of $1.2143 hit this month.
The currency fell 0.8 percent on Friday after Fitch cut
Spain's credit rating by one notch to AA-plus, saying the
country's economic recovery will be "more muted" than the
government forecast due to its austerity measures.
[]
Underscoring worries about regional debt pressures, France
admitted on Sunday that keeping its top-notch credit rating
would be "a stretch" without some tough budget decisions,
following German hints that Berlin may resort to raising taxes
to help bring down its deficit. []
The euro was also capped on Monday by remarks from China's
Premier Wen Jiabao, who said global growth remained vulnerable
to sovereign debt risks and the possibility of a second
downturn. []
The euro rose 0.8 percent against the yen to 112.69 yen
<EURJPY=R> while the dollar rose 0.5 percent against the yen to
91.50 yen <JPY=>, a 10-day high. []
Traders are awaiting manufacturing surveys from Europe,
Britain, China and the United States on Tuesday which may
provide the first detailed look at whether May's market mayhem
inflicted any serious damage on the global recovery.
Market attention is also shifting to the U.S. employment
report for May due on Friday to see whether it can help revive
market confidence, even as concerns about Europe's fiscal
problems continue. []
"The market is waiting for the jobs data to see if the
U.S., whose economic figures are relatively firm, could provide
support for the global economy," said Satoshi Okagawa, head of
forex and money trading at Sumitomo Mitsui Banking in
Singapore.
WORST MONTH SINCE LEHMAN
Despite modest gains for the day, the MSCI index of Asia
Pacific stocks outside Japan <.MIAPJ0000PUS> was on track for a
loss of more than 11 percent for May, its worst month since the
aftermath of the Lehman Brothers collapse. The index has lost
close to 9 percent so far this year.
Japan's Nikkei <> ended up 0.1 percent as the yen
sagged to a 10-day low against the dollar, boosting shares of
Japanese exporters. The Nikkei lost 11.7 percent on the month.
According to Nomura, the last two weeks of May saw net
outflows of US$24 billion from global equity mutual funds as
market volatity grew, which in absolute terms, negated inflows
from the past 15 weeks.
U.S. crude oil futures <CLc1> rose 45 cents to $74.44 a
barrel.
Front-month crude fell $12.18, or 14.1 percent, in May, the
biggest monthly percentage loss since December 2008, on worries
that a setback in the global recovery would dampen energy
demand.
Spot gold <XAU=> rose to $1,213.90 an ounce, up $1.15 from New
York's notional close on Friday.
(Additional reporting by Elaine Lies and Kaori Kaneko in
Tokyo)
(Editing by Kim Coghill)
