* Euro slips to two-month low as ECB leaves rates unchanged
* World shares weaker as U.S. fiscal problems weigh
* European stocks see small recovery after sharp selloff
* Commodity markets watch leadership transition in China
LONDON, Nov 8 (Reuters) - The euro hit a two-month low on Thursday after the European Central Bank kept its interest rates unchanged, despite growing evidence of a widespread economic slowdown.
Equity markets, however, recovered slightly after Wednesday's sharp selloff caused by concerns about a looming U.S. fiscal crisis, with stock index futures pointing to a modestly firmer start on Wall Street.
The ECB had been widely expected to leave its main rate at 0.75 percent but recent comments by President Mario Draghi on the weak economic outlook and gloomy European Commission GDP estimates had increased speculation it may consider a move.
The lack of action left the common currency down 0.25 percent at $1.2735 with many analysts expecting the slowdown across the euro zone, and especially in Germany, to prompt a cut before the year-end.
"The general theme here is that weak growth is weighing on the euro," said Steven Saywell, global head of FX strategy at BNP Paribas.
At a news conference, Draghi cited above-target inflation and improved financial market conditions as reasons for the decision to hold rates.
Earlier the Bank of England also opted against easing monetary conditions any further, with policymakers hoping a new lending scheme will boost activity while some worried about inflation.
The euro had been under pressure before the ECB decision even though the Greek parliament approved in the early hours of Thursday an austerity package needed to unlock international aid and avert bankruptcy, defying political rifts and violent protests.
CLIFF EDGE LOOMS
The dollar was up 0.15 percent to near its two-month high against a basket of major currencies of 80.924, as concerns about the U.S. fiscal problems raise its safe-haven appeal.
Investors fear the preservation of the status quo in Washington after Tuesday's elections may make it hard to reach a deal on about $600 billion in spending cuts and tax increases due to start early next year, and that this could derail the U.S economic recovery.
The "fiscal cliff", which can be avoided only if Democrats and Republicans settle their differences in Congress, provoked a selloff on Wall Street on Wednesday. Asian markets followed suit, pushing the MSCI world equity index down 0.25 percent at 326.04 points.
"The fiscal cliff is here and it will reveal itself to be very real," said Jeffrey Sica, president of Sica Wealth Management.
Sica said higher capital gains taxes could form part of a Congressional deal to tackle the deficit, and may encourage investors to sell equities. "The strong likelihood that capital gains (could) double will force investors to take profits now to avoid paying higher capital gains taxes later," he said.
In Europe the FTSEurofirst 300 index, which lost 1.4 percent in Wednesday's selloff, recovered slightly on Thursday to be up 0.4 percent at 1,104.16 points. London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX all traded around 0.2 to 0.6 percent higher.
SPAIN PASSES BOND TEST
In the fixed income market most attention was on a Spanish sale of 4.8 billion euros ($6 billion) of new debt, which included a 20-year bond - the longest dated issue to be auctioned since mid-2011.
The sale, which completes the government's funding needs for this year, means it can hold out longer before asking for international aid.
However, yields on existing Spanish debt rose after the auction as traders viewed some of the bids accepted by the government to complete the sale as quite low.
Spanish 10-year bond yields rose to 5.86 percent, up 14 basis points to their highest since mid-October. However, German 10-year government bonds, often an indicator of any change of sentiment in the euro zone, were largely unchanged at 1.38 percent.
In commodity markets concerns about weak demand from top consumer China added to the concerns about the impact of the fiscal cliff and weak euro zone growth.
In China the government has begun a once-in-a-decade leadership change against a backdrop of growing social unrest and public anger at corruption and a gap between rich and poor.
Traders are looking for hints from the Communist Party Congress on future policy direction that may affect demand from the world's biggest consumer of many industrial commodities.
"So far, contents of speeches from the 18th Party Congress have been within expectations. There hasn't been anything particularly encouraging to investors," said Orient Futures derivatives director Andy Du.
Oil rose after tumbling more than $4 on Wednesday amid concerns about weak demand for fuel as the U.S. and European economies face the risk of a prolonged slowdown.
Brent crude traded 91 cents higher at $107.73 per barrel having fallen nearly 4 percent on Wednesday, its steepest drop since December 2011.
U.S. crude rose $1.02 to $85.46 a barrel, after losing nearly 5 percent in the previous session, also its biggest slump since December 2011.