* Euro steadies after Spain downgrade; still under pressure
* Euro on track for 7.7 pct decline in May vs. dollar
* Asian stocks flat; head for worst month since Oct 2008
* Manufacturing data from major economies awaited
By Vikram S Subhedar
HONG KONG, May 31 (Reuters) - The euro steadied on Monday
but remained under pressure after Fitch downgraded Spain's
credit rating and France said keeping its top credit rating may
be a stretch without tough budget cuts.
The European single currency <EUR=> is on track for a hefty
7.7 percent drop against the dollar in May on nagging worries
that Greece's debt crisis will spread to other countries in the
euro zone, stunting the global economic recovery.
The decline would be the euro's sixth straight monthly fall
and its biggest percentage drop since January 2009.
Asian stocks were little changed but looked set to post
their worst month since October 2008 as Europe's sovereign debt
woes made investors reluctant to hold riskier assets such as
stocks and commodities.
"The market is susceptible to negative news and small
rallies in the euro on short-covering don't last for long,"
said a trader at a Japanese bank.
"This jitteriness in the market is likely to continue for
a while, and it is difficult to see a recovery in market
sentiment as there are worries that further bad news about
southern European countries may come out," he said.
Investors may avoid building up positions as the United
States and the UK are on holiday on Monday, though some
month-end flows may be seen in the market, traders said.
The euro was steady at $1.2282 <EUR=>, staying above a
four-year low of $1.2143 hit this month.
The currency fell 0.8 percent on Friday after Fitch cut
Spain's credit rating by one notch to AA-plus, saying the
country's economic recovery will be "more muted" than the
government forecast due to its austerity measures.
[]
Underscoring worries about regional debt pressures, France
admitted on Sunday that keeping its top-notch credit rating
would be "a stretch" without some tough budget decisions,
following German hints that Berlin may resort to raising taxes
to help bring down its deficit. []
Traders are awaiting manufacturing surveys from Europe,
Britain, China and the United States on Tuesday which may
provide the first detailed look at whether May's market mayhem
inflicted any serious damage on the global recovery.
The MSCI index of Asia Pacific stocks outside Japan
<.MIAPJ0000PUS> rose 0.3 percent, but was on track for a loss
of more than 11 percent for May, its worst month since the
aftermath of the Lehman Brothers collapse
Japan's Nikkei <> slipped 0.2 percent as falling
commodities prices hit shares of trading firms, offsetting
gains in exporters as the yen fell against the dollar and the
euro.
Market players said the impact of Spain's rating cut on the
broader market was limited for now, noting that many analysts
had expected the move and only the timing was a surprise.
"While Fitch did cut Spain's rating, S&P did the same thing
in April, so it's not as if the move was all that new," said
Takashi Ushio, head of the investment strategy division at
Marusan Securities.
"There's the sense that the Nikkei may be about to start a
bit of a rebound. It's held up quite well even though Wall
Street fell. But gains will definitely be capped around 10,000
for now."
Shanghai copper prices <SCFc3> ticked lower, on track for a
5 percent monthly fall after London futures saw their weakest
monthly performance since January on worries about euro zone
debt. []
Crude oil futures prices <CLc1> rose half a percent to
above $74 a barrel in thin trade, after posting their worst
monthly loss since December 2008 on worries that a setback in
the global recovery would hurt energy demand.
(Additional reporting by Elaine Lies and Kaori Kaneko in
Tokyo)
(Editing by Kim Coghill)
