(Adds Wall Street outlook, fresh quotes, prices)
* European stocks ease after Friday's sharp gains
* Oil recovers to over $115 a barrel
* Wall St set to open slightly lower
By Gerrard Raven
LONDON, Aug 25 (Reuters) - European stock markets eased on
Monday after sharp Friday gains while oil prices, which had
tumbled before the weekend, made up a little of their lost
ground.
With trade thin because London markets were closed, sterling
hit a two-year low against the dollar in the aftermath of data
showing a stagnant British economy in the second quarter.
Euro zone government bond yields fell sharply after a G20
finance official told Reuters the International Monetary Fund
had trimmed some of its forecasts for economic growth, with the
euro zone figure for 2008 cut to 1.4 percent from 1.7. percent.
Futures trading indicated Wall Street would open slightly
lower, ahead of U.S. July existing homes sales data due at 1400
GMT.
Lehman Brothers <LEH.N> was down about 10 percent in
European trade after a South Korean regulator voiced concern
about state-run Korea Development Bank's [] interest in
buying a global bank, possibly Lehman.
In Europe, the FTSEurofirst 300 <> index was down 0.34
percent after a 1.8 percent gain on Friday, but analysts
continued to believe that the gloom hanging over stockmarkets
had lifted a little.
"The clearly positive sign is that the raw material, oil and
food prices are on the decline and the inflation outlook is more
favourable," said Tuomas Komulainen, Helsinki-based strategist
at Danske Market Securities.
"On the negative side is the euro zone economy slowing more
than expected, but overall things are slightly more positive for
equities," he added.
The oil and gas sector shares were weaker following Friday's
5.4 percent fall in oil prices with Total <TOTF.PA> losing 1.13
percent and Royal Dutch Shell <RDSa.AS> down 0.46 percent.
But oil prices moved higher with U.S. light crude for
October delivery <CLc1> up 76 cents at $115.35 a barrel as
analysts said they felt traders saw a bottom to the market
following Friday's falls.
"Some of them may be seeing a buying opportunity at these
price levels," said Gerard Rigby at Fuel First Consulting in
Sydney. "Lingering concerns about Russia and Georgia are also
giving some support."
DOLLAR MAKES GAINS
The dollar benefited from the oil price drop and from recent
signs that Europe and Asia are feeling the effects of the global
credit and commodity crunches every bit as keenly as the United
States.
The latest sign of this came on Friday when Britain reported
that its economy registered no growth at all in the second
quarter, so in early trading sterling bore the brunt of the
dollar's resurgence.
The British currency hit a two-year low of $1.8407 before
rebounding to $1.8538, and the euro was slightly lower at
$1.4770.
"The general sentiment towards lower rates and towards the
U.S. economy managing to get out of the global crisis earlier
than the other economic areas will support the dollar over the
next couple of months," said Antje Praefcke, currency strategist
at CBCM in Frankfurt.
Euro zone government debt prices rebounded from two-week
lows hit the previous session on the easing in equity markets
and the news that the IMF had cut its euro zone GDP forecast
while maintaining a 1.3 percent 2008 growth figure for the
United States.
The two-year Schatz yield slipped 11.3 basis points on the
day to 4.025 percent <EU2YT=RR>.
(Editing by Stephen Nisbet)
