GLOBAL MARKETS-Europe steadies after risk aversion sweeps Asia
* Snow-blasted Wall Street expected to edge higher, * European shares firm after Asian markets roiled * Euro runs into profit-taking, yen gets a lift * Gold bounce continues, oil nurses losses on supply outlook By Marc Jones LONDON, Jan 3 (Reuters) - European stock markets resisted a wave of risk aversion that had swept across Asia on Friday, but the euro weakened as the yen and gold held onto most of their early gains. Wall Street, in the grip of a snowstorm, was expected to see a quiet open after Thursday's poor start to 2014. With little data on tap, the focus will be on a speech by outgoing Federal Reserve Chairman Ben Bernanke for any fresh details on the bank's plans for stimulus withdrawal. In Asia, where stocks suffered their toughest session in almost a month and a stack of major currencies fell against the safe-haven yen, investors had taken fright at more weak data from Beijing. A measure of activity in China's services sector slipped back in December, just as one for manufacturing had on Thursday. "Asian activity was interesting because we had the PMI number from China which was disappointing," said Rabobank currency strategist Jane Foley. "The Asian stock markets came off and consistent with that there was some yen buying." European stocks fared better as global manufacturing ended 2013 on a strong note with the United States, Japan and Germany all seeing demand pick up. Having tumbled on Thursday and seen an indecisive start to Friday, the benchmark FTSEurofirst 300 index rose 0.4 percent, also helped by some upbeat Christmas retailers and weak euro zone lending data likely to keep easing on the ECB's agenda. EURO WOES The euro weakened as speculators booked profits on long positions after a strong 2013. Having spent much of the day testing a six-week low, the common currency had recovered slightly to 1.3652 by mid-afternoon. The same forces gripped sterling, another strong performer in recent months. The pound peeled away to $1.6424 from a 28-month peak of $1.6605 amid a slump in UK business lending. The yen enjoyed a short-covering bounce. Borrowing in yen to buy higher-yielding assets has been a popular trade, leaving the market vulnerable to sudden, if usually brief, reversals. The dollar came off to 104.35 yen after rising as high as 105.44 on Thursday, its strongest since October 2008. The euro retreated as low as 142.10 yen from a peak of 145.12 on Thursday. "The yen is strong because it remains the major currency market's best proxy for risk, so when you have a strong correction lower in risk appetite that sees the yen supported," said John Hardy head of FX strategy for Saxo bank in Copenhagen. "I suspect it is a bit of a knee-jerk consolidation at the start of the year, but it is interesting that it started that way GOLD SHINES Another source of anxiety in Asia had been Thailand. Growing political uncertainty lopped another 0.5 percent off stocks there after a 5 percent decline on Thursday. The Thai currency also took a bath, hitting its lowest since early 2010 at 33.03 per dollar. However, as the tensions wore off in Europe, bond markets found their recent rhythm again. The short-covering pressure that had extended to U.S. Treasury debt started to ease allowing yields on the 10-year note to edge back up to a fraction below 3 percent having topped at 3.04 on Thursday, it's highest since mid-2011. German and other top-rated European government bonds largely mirrored the moves, while Spanish yields hit their lowest level since September 2010 as encouraging jobless data boosted sentiment. Oil prices also steadied after taking a fall on Thursday as Libya prepared to restart a major oilfield and on speculation of a sharp rise in crude stockpiles in the United States. Brent crude levelled off at $107.78 a barrel but that followed a drop of $2.98 on Thursday. U.S. crude was off 13 cents at $95.30, after shedding almost $5 the day before. Gold was another beaten-down asset to get a reprieve, along with silver and platinum. Bullion had swung up to $1,230, from as low as $1,183.80 early in the week. "Positive bullion prices in reaction to the decline in equities may set the tone for 2014 and reinforce the negative correlation between the two," HSBC analysts said in a note.