May 10, 2012 / 4:02 AM / 7 years ago

European shares stage relief rally, euro weak

Market prices are reflected in a glass window at the Tokyo Stock Exchange in Tokyo. REUTERS/Toru Hanai

LONDON (Reuters) - European shares and the euro staged fragile recoveries on Thursday after Spain moved to clean up its banks and Europe’s bailout fund approved a key payment to Greece, but disappointing Chinese trade data kept markets on edge.

The political outlook in Greece, which has sent investors scurrying for safe haven assets, was unchanged as last-ditch efforts to form a government were expected to fail and new elections were the more likely outcome.

“Political uncertainty (in Greece) will remain a live issue, and that, combined with weak economic prospects in the euro area, should keep market concerns elevated,” Barclays Capital said in a note to clients.

The FTSE Eurofirst .FTEU3 index of top European shares opened 0.4 percent higher at 1,018.02 point with stronger gains posted in Spanish .IBEX and Italian .FTMIB markets.

The MSCI’s world equity index .MIWD00000PUS stood just 0.1 percent higher at 315.6 point after six straight days of falls.

The euro was near a 3-1/2-month low against the dollar, up 0.15 percent at around $1.2954, after worries about the costs of rescuing Spain’s banks and fear Greece may be forced out of the euro pushed it to a low of $1.2910 on Wednesday.

Decisions from the Bank of England (BoE) and the Norwegian central bank later will be watched for any sign inflation concerns are rising.

Richard Hubbard

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