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* Euro slips as market sells into rallies
* Stocks regain ground from 8-month lows hit on Friday
* More market volatility expected as uncertainty persists
* European shares seen rising after last week's sell-off
By Aiko Hayashi
TOKYO, May 24 (Reuters) - The euro struggled to hold on to
gains on Monday as investors sold into its latest bounce, while
Asian stocks recouped ground from last week's eight-month lows
on fears the euro zone debt crisis will hit world economic
growth.
Market volatility remained high following the euro's
decline to a four-year low last week and investors further cut
risk in their books to wait for things to calm down, traders
said.
"Today's (share) gains were merely a technical rebound as
the slides last week were too much, too fast," said Eddy Chen,
a manager at the fund business at Taiwan's First Financial.
Losses in the Australian dollar deepened after Rio Tinto
<RIO.AX><RIO.L> said a mining tax had damaged Australia's
investment reputation. The currency bounced back from its lows
as stocks in China, with which Australia has close trade ties,
rose 3 percent. []
European stocks were expected to rise after last week's
sharp selloff. By 0640 GMT, futures for the STOXX Europe 50
<STXEc1> traded around 1 percent higher. Germany's DAX futures
were half a percent higher, while those for France's CAC
<FCEc1> were around 0.6 percent up.
The MSCI index of Asia-Pacific shares outside of Japan
<.MIAPJ0000PUS> rose 1.4 percent after a weaker start, moving
up from the lowest level since September 2009.
The Shanghai Composite Index <> gained 3.6 percent,
buoyed by a surge in property shares after a media report
quoted a government official as saying a new property tax
recently under discussion would not come within the next three
years.
Investors sold Japanese exporters' shares to pull the
benchmark Nikkei average <> down to its lowest level in
more than five months, taking the view that a strong yen
undermines future profits. The Nikkei later came off lows and
closed almost flat.
The Nikkei fell 6.5 percent last week, its worst weekly
drop in more than a year.
EURO ZONE WOES
The euro <EUR=> fell to around $1.2500 in Asian trade from
around $1.2570 in late New York dealings on Friday. The
currency had posted its first weekly gain against the dollar in
six weeks last week as investors bought it after a long slide.
Dealers said the health of the Europe's banks weighed on
the euro. At the weekend, the Bank of Spain said it was taking
over the running of savings bank CajaSur after its planned
merger with another small Spanish lender failed.
[]
"The currency market focus is still the euro zone's fiscal
trouble, but wariness about its impact on the global economy
seems to be spreading, making investors increasingly risk
averse," said Jun Kato, senior manager for investment at
Shinkin Asset Management.
The Australian dollar <AUD=> <EURAUD=R> fell as investors,
fearful of slower world economic growth, unwound carry trades
funded in the euro.
The euro rebounded sharply against the high-yielding Aussie
<EURAUD=R> last week, hitting three-month highs of A$1.5456, on
the back of a huge sell-off by hedge funds.
On Monday, the pair was trading at A$1.5090, around the
same as late levels in New York on Friday. The Australian
dollar fell 0.4 percent against the yen to 74.72 yen
<AUDJPY=R>.
The Aussie dollar extended its broad slide after Rio Tinto
said it is reviewing all capital spending plans in light of the
government's proposed resource super profits tax.
Australian stocks rose, buoyed by bargain hunters picking
up banks and miners, following a slight recovery on Wall
Street. The benchmark S&P/ASX 200 index <> gained 2.1
percent to 4,395.4, off 10-month lows hit on Friday.
COMMODITIES HIGHER, CAUTION REMAINS
Oil prices <CLc1> snapped three straight sessions of
decline and rose above $70 a barrel. Analysts said sentiment
was fragile and prices could be again be hit by pessimism on
the economy.
Oil at $65 per barrel is still reasonable for all
producers, but a price below that will be a "disadvantage", the
chief executive of Saudi Basic Industries said on Sunday.
[]
Shanghai copper <SCFc3> rose more than 2 percent, tracking
gains in London copper the previous session, as traders expect
the market to stabilise this week in the absence of further bad
news from the euro zone.
Gold <XAU=> edged higher after falling for five straight
sessions, with investors attracted by the precious metal in the
face of remaining uncertainty over the global economy.
Ten-year Treasuries edged up around 4/32 in price to yield
3.222 percent <US10YT=RR>, down roughly 2 basis points from
late U.S. trading on Friday. The 10-year yield has slid more
than 40 basis points so far in May, and is on track for its
biggest one-month decline since December 2008.
(Additional reporting by Faith Hung in TAIPEI and Kaori Kaneko
in TOKYO; Editing by Jan Dahinten)
