* World shares fall for fifth day, Wall St set to open lower
* Uncertainties over Greece and U.S. fiscal cliff hit
* Euro trims losses on report Germany preparing Greek aid
* Oil, gold slip as investors worry over global demand
By Richard Hubbard
LONDON, Nov 13 World shares fell for a fifth day
on Tuesday after international lenders clashed over help for
Greece, but the euro bounced back on a report that Germany wants
to bundle aid payments to Athens into a single jumbo deal.
Worries about the looming fiscal crisis in the United States
kept U.S. share markets under pressure, with stock index futures
pointing to a lower start on Wall Street.
Investors had initially sold shares and the euro in reaction
to a public dispute between the euro zone and the IMF over the
longer-term target date for Greece to shrink its debts which
threatened to rekindle the region's crisis.
The MSCI world equity index was down 0.3
percent to 321.90 points by 1230 GMT, off its lows for the day
but down at a level not seen since early September.
German newspaper Bild said Berlin was working on a single
aid package of more than 44 billion euros ($55.9 billion) to
cover Greek debt repayments this year. Shares trimmed their
losses and the euro gained following the report, which cited
A finance ministry spokeswoman said no final decision had
been made on the next loan payments to Greece, and it was not
clear when any jumbo funding might go through. H owever, the
report soothed some fears that Athens might default and have to
leave the euro zone.
"If there are signs that Greece could get a disbursement
before they run dry of money that would give the euro a boost,"
said Dag Muller, technical analyst at SEB.
The shift in sentiment left the euro little changed at
$1.2703, having earlier dropped around 0.3 percent to $1.2 661
<E UR=>, its lowest since Sept. 7.
The FTSE Eurofirst 300 index index of top European
shares which had been down over down 0.6 percent, recovered to
be off 0.35 percent at 1,090.18. London's FTSE 100,
Paris's CAC-40 and Frankfurt's DAX all fell
over 0.5 percent.
EUROPE FEARS REKINDLED
The euro started weaker after euro zone finance ministers
said Greece should be given until 2022 to meet a goal for
reducing its debt mountain to a more manageable level, but
International Monetary Fund chief Christine Lagarde insisted the
existing target of 2020 should stay.
Behind the differences was a debate over whether euro zone
governments should write off some of their Greek debt holdings
to help Athens, an idea which Germany opposes.
A weak German ZEW investor sentiment survey, which showed a
drop to -15.7 in November from -11.5 in October, also heightened
concerns about the impact of the euro zone crisis on Europe's
largest economy and knocked the euro.
Analysts said the ZEW index had increased the likelihood of
a recession in Germany.
"The ZEW looks broadly consistent with economic stagnation
in Germany. But we think the economy will slide back into
recession next year as the peripheral debt crisis intensifies
and business and consumer confidence weaken further." said
Jennifer McKeown, European economist at Capital Economics.
U.S. markets focused on the return of lawmakers to
Washington after last week's elections, with only seven weeks to
reach agreement on scheduled automatic tax hikes and budget cuts
that threaten to trigger another recession.
President Barack Obama has scheduled talks with business,
civic and labour leaders on Tuesday before of a meeting set for
Friday of top Republicans and Democrats in Congress.
Analysts say a failure to reach a compromise would also
threaten the Federal government's ability to keep borrowing, and
could see its credit rating downgraded.
S&P 500 futures SPc1 were down 0.4 percent at 1,372.50
points, Dow Jones industrial average futures dropped 0.4
percent and Nasdaq 100 futures fell 0.6 percent
U.S. Treasuries also reflected the growing concerns that a
compromise may be difficult to achieve with 10-year yields
falling to 1.593 percent from 1.613 percent on
Friday. The U.S. Treasury market was closed on Monday for the
Veterans' Day holiday.
Earlier MSCI's broadest index of Asia-Pacific shares outside
Japan dropped 1 percent to hit a seven-week low
after shares in China and Hong Kong fell sharply on worries
about the outlook for the world's second largest economy.
The falls were triggered when China's state media reported
that government curbs on the housing market would remain,
raising fears that the Communist Party congress would bring
little change in economic policies.
The uncertainty over the euro zone's debt problems and the
caution over a U.S. fiscal policy standoff spread across the
U.S. crude futures fell 0.25 percent to $85.40 a
barrel and Brent dropped 0.5 percent to $108.56.
"There is plenty of oil and the market is well supplied, but
t he economic outlook both in the United States and Europe is
weak and that's putting downward pressure on prices," said Ken
Hasegawa, a commodity sales manager at Newedge Japan.
Gold fell 0.1 percent to $1,726.24 an ounce, down
from a 3-week high of around $1,738 struck on Friday. Despite
the recent fall, gold is still up around 10 percent so far this
"Gold's rally may be starting to show signs of topping out,
as investors seem to be discounting the possibility of a fiscal
cliff deal being reached," INTL FCStone said in a note.