* Euro slips 0.8 pct ahead of euro zone finmin meeting
* Investors anxious for deal on boosting euro safety fund
* Global stocks dip; European rally runs out of steam
By Jessica Mortimer
LONDON, Jan 17 (Reuters) - The euro slipped on Monday and a
brief European stock market rally ran out of steam as hopes of
swift action from policymakers to boost the euro zone's rescue
fund faded ahead of a meeting of finance ministers.
Concerns about whether officials can agree on ways of
bolstering the European Financial Stability Facility
[] weighed on market sentiment, with analysts
saying clearer signs of progress would be needed for the euro to
make significant gains.
"It's becoming increasingly apparent that Germany doesn't
want an increase in the rescue fund and that's weighing on euro
sentiment today because there were positive expectations
building last week," said Manuel Oliveri, currency strategist at
UBS in Zurich.
The euro was down 0.8 percent on the day against the dollar
<EUR=> at $1.3264, having rallied some 4 percent last week to
hit a one-month high of $1.3458 on Friday. Against a basket of
currencies, the dollar <.DXY> was up 0.46 percent at 79.521.
European Central Bank President Jean-Claude Trichet gave a
fresh thumbs-up for a bigger safety fund on Sunday, a day before
euro zone finance ministers are expected to discuss an increase
in its effective lending capacity.
Some analysts pointed to a Feb. 4 European Council meeting
as a more likely stage for such decisions to be made, though
this week's meeting should give investors a sense of how much
agreement there is among euro zone members to enlarging the
facility.
German Bund futures <FGBLc1> were 17 ticks lower at 124.74.
GLOBAL STOCKS
The MSCI world equity index <.MIWD00000PUS> was down 0.3
percent at 336.47, off a 28-month high of 337.68 touched
overnight as last week's rally petered out.
Chinese stocks <> fell around 3 percent after China
raised banks' required reserves for the fourth time in just over
two months on Friday.
European shares <> fell 0.1 percent, shedding initial
gains driven by a surge in British engineering firm Smiths Group
<SMIN.L> after it rejected a bid for its medical services unit,
and gains in oil shares. Trading was expected to be muted,
however, with U.S. markets closed for a public holiday.
Oil stocks were led higher by BP <BP.L> following the share
swap and arctic exploration deal that the London-based oil major
signed with Russia's largest oil producer Rosneft <ROSN.MM> late
on Friday.
"This is a unique opportunity for BP to gain access to a
prospective new frontier area, where direct access as a
non-Russian company would not have been possible," analysts at
Goldman Sachs said in a research note.
Commodity prices were broadly lower, with U.S. crude oil
<CLc1> down 0.7 percent at $90.91, while copper prices <CMCU3>
were also lower as a firmer dollar curbed upside momentum.
"The U.S. is having a holiday today, and the crude and
equities markets are not expected to move dramatically," said
Ken Hasegawa, a commodity derivatives manager at Japan's Newedge
brokerage.
Gold <XAU=> was at $1,359.50, down slightly from $1,360.85
in New York late on Friday but underpinned by physical buying
ahead of the Chinese new year.
Emerging stocks <.MSCIEF> were down 0.5 percent.
(Additional reporting by Neal Armstrong in London and Seng Li
Peng in Singapore; Editing by John Stonestreet)
