* Japan shares bounce back; Europe lower
* Wall Street set to open lower
* Yen steady but near record high against dollar
* Bahrain, Libya concern boosts oil price
By Jeremy Gaunt, European Investment Correspondent
LONDON, March 16 (Reuters) - Japanese stocks rebounded on
Wednesday from a sell-off that some investors thought overdone,
but any broader global rise was thwarted by trouble in Bahrain
and concerns about euro zone debt.
Wall Street looked set to open lower as the price of oil
climbed. Brent crude <LCOc1> traded back above $110 a barrel
after Bahraini security forces cracked down on protesters, with
fighting in Libya simmering in the background.
Portugal's 12-month borrowing costs rose at a Treasury bill
auction after a two-notch rating downgrade by Moody's, showing
the debt-laden country remains under pressure despite a euro
zone deal to tackle the debt crisis.
Some sectors of financial markets were readjusting after a
worldwide battering of risk plays following the earthquake,
tsunami and nuclear disasters that have hit Japan, the world's
third largest economy.
MSCI's all-country world stock index <.MIWD00000PUS> was up
half a percent. It fell as much as 4.5 percent over the past
three sessions on the back of a near 20-percent two-session dive
on Japan's Nikkei average <>.
Wednesday's recovery was mainly boosted, however, by Asia
stocks, with the Nikkei regaining 5.7 percent. It remained down
more than 11 percent for the year.
There was widespread belief that the post-earthquake
sell-off had gone too far too quickly, but still concern that
the nuclear reactor crisis was unresolved.
"Uncertainty in the Fukushima nuclear power plant is clearly
making market participants very nervous," said Kazuhiro
Takahashi, general manager at Daiwa Securities Capital Markets
in Tokyo.
Europe's Eurofirst 300 <> was down 0.3 percent. Banks
lead the falls after the Moody's downgrade of Portuguese debt
overnight and the auction reflected continued stress.
YEN SLIPS
The yen steadied around a four-month high versus the dollar.
Japan's nuclear crisis was seen as triggering more safe-haven
yen demand, raising the prospect of intervention to stem big
gains.
The dollar <JPY=> traded at 80.70 yen, just above a
four-month low of 80.60 yen hit on Tuesday.
"We wouldn't talk about a recovery in dollar/yen yet," said
Lutz Karpowitz, FX strategist at Commerzbank in Frankfurt.
"(But) we don't expect a drop under 80.00 yen because we expect
the authorities to step into the market under that level."
The dollar index <.DXY> aganst major currencies rose 0.3
percent, while the euro <EUR=> slipped 0.5 percent to $1.3925,
having failed to break above a four-month high of $1.4036 hit
earlier this month.
German government bonds reversed earlier losses as stocks
turned around.
Portuguese bonds underperformed following the Moody's
ratings cut and yields rose at the sale of 1-year paper.
(Additional reporting by Akiko Takeda, Antoni Slodkowski,
Naomi Tajitsu, Kirsten Donovan and Atul Prakash; Editing by
Patrick Graham)
