* Stocks flat, U.S. closed
* Dolalr hit two month high against basket
* Euro zone peripheral debt spreads slightly wider
By Jeremy Gaunt, European Investment Correspondent
LONDON, Nov 25 (Reuters) - Financial markets regained some
composure on Thursday after roller-coaster sessions prompted by
the euro zone's debt problems and jitters over tensions on the
Korean peninsula.
Risk appetite improved slightly on the back of solid
overnight gains on Wall Street, but there would be no follow
though from that quarter as U.S. markets were closed for the
Thanksgiving holiday.
World stocks as measured by MSCI <.MIWD00000PUS> were down
slightly, with Europe and Japan up.
Yield spreads on Spanish and Portuguese bonds -- watched for
signs they will be the next dominoes to topple in Europe's
crisis -- were slightly tighter than recent highs.
Some attention was turning to German debt with investors
pushing up yields after a raft of robust economic data and as
they considered whether the cost of bailouts would impact core
issuers.
"If it all goes wrong and a lot more money is needed then
it's going to impact Germany, plus their banks have a lot of
exposure, which is why we're not seeing the typical
flight-to-quality flows you might expect," said one trader, who
asked not to be named.
Investors have also begun considering whether German plans
to include collective action clauses in eurozone sovereign debt
issues will lead investors to price in more risk generally for
such bonds.
Some institutional investors even have rules against buying
bonds with CACs altogether.
On foreign exchange markets, meanwhile, the euro slipped
about 0.2 percent to $1.3312 <EUR=>, helping the dollar hit a
two-month high against a basket of major currencies <.DXY>.
"Things are a bit sidelined due to the U.S. holiday but
there is still a lot of nervousness about euro zone peripheral
debt problems. So the euro remains a sell into rallies and not a
buy on dips", said Paul Mackel, HSBC's director of currency
strategy.
MIXED STOCKS
World stock markets were generally steady because of the
U.S. hiatus with MSCI's all country world index down 0.1 percent
and its emerging market counterpart gaining 0.1 percent.
Europe's FTSEurofirst 300 <> rose about 0.1 percent.
Japan's Nikkei <> closed up 0.5 percent.
Koen De Leus, strategist at KBC Securities, said the
European market was getting some support from recent good
economic data, including on consumer spending, joblessness and
and consumer confidence.
French consumer confidence was the latest sentiment
indicator to beat forecasts in Europe on Thursday, following a
strong reading from Germany's closely watched Ifo survey a day
earlier.
"Markets are on a rollercoaster. Despair on the ride down
due to the day-by-day increasing debt contagion in Europe is
occasionally relieved by better-than-expected macro data from
Europe and the U.S. It's a delicate balance," De Leus said.
(Additional reporting by Mike Dolan, Atul Prakash and Anriban
Nag; editing by Patrick Graham)
( (jeremy.gaunt@thomsonreuters.com; +44 207 542 1028; Reuters
Messaging: jeremy.gaunt.reuters.com@reuters.net))
