* 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 fears about the global economic recovery
dominated investors thinking and renewed concerns over Europe's
banking system undermined flows into risky assets.
Euphoria over China's move to allow a flexible yuan has
faded and markets worry a surprise drop in U.S. home sales could
see the Federal Open Market Committee offer a less upbeat
outlook after a two-day meeting ends on Wednesday. []
"(The Fed) may downgrade its view of the US economy ...
citing the latest disappointing employment data, renewed
weakness in the housing sector and recent turmoil in Europe,"
said Nick Stamenkovic, rate strategist at RIA Capital Markets.
European shares slipped for a second day with the
FTSEurofirst 300 index <> 0.4 percent lwoer by 1020 GMT.
Financial stocks were among the top losers on concerns about
Europe's banking sector 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
a lifetime low on 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 0.4 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
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."
Top U.S. economic leaders also warned that Group of 20
nations should beware of putting measures in place to curb
deficits so quickly that they risk pushing the global economy
back into recession. []
"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.
The dollar index <.DXY>, which measures the dollar's value
against a basket of currencies, was down 0.1 percent at 85.991,
but up from a one-month low of 85.091 marked on Monday.
The euro was up 0.2 percent against the dollar at $1.2277,
having dipped to as low as $1.2244 earlier.
Sterling <GBP=> extended gains after the UK's new government
outlined a tough budget which convinced investors the country is
serious about tackling its fiscal problems.
Adding to the pound's rally were Bank of England minutes
showing one policymaker had voted for a rise in interest rates
this month -- the first vote for tightening in nearly two years.
The fall in equities helped support euro zone government
bonds and U.S. Treasuries. Benchmark 10-year German Bund yields
<DE10YT=TWEB> were down about three basis points at 2.668
percent while the benchmark 10-year U.S. Treasury yield was
about one basis point lower at 3.157 percent <US10YT=RR>.
Oil extended losses below $78 a barrel after U.S. industry
data showed an unexpected jump in crude and gasoline stocks, and
investors looked to government figures later in the day for
confirmation.
U.S. crude for August delivery <CLc1> shed about 30 cents to
$77.53 a barrel.
(Additional reporting by Kirsten Donovan and Tamawa Desai;
Editing by Patrick Graham)
