* Euro sheds early gains as China hikes reserve requirements
* Copper hit on China move
* World stocks ease; Chinese equities down 1.3 pct
* JPMorgan to post quarterly results
By Dominic Lau
LONDON, Jan 14 (Reuters) - The euro was flat against the
dollar on Friday, shedding early gains posted on ECB concerns
about inflation as China again raised banks' reserve
requirements to cool growth rates.
The tightening hit copper prices and speculation about such
a move earlier sent Chinese stocks <> 1.3 percent lower,
while world stocks measured by the MSCI All-Country World Index
<.MIWD00000PUS> extended losses, falling 0.2 percent.
Futures on the U.S. S&P 500 and the Dow Jones industrial
average were flat to slightly lower ahead of quarterly results
from lender JPMorgan <JPM.N>.
Thursday's comments by European Central Bank President
Jean-Claude Trichet warning of a short-term inflationary threat
added fuel to a short-covering rally in the euro.
The remarks surprised markets, which had expected a more
dovish tone and sparked speculation the ECB may raise interest
rates earlier than previously thought.
"A lot of banks are busy reassessing their view on when the
ECB will raise interest rates, which is supporting the euro and
adding to the squeezing of short euro positions," said Niels
Christensen, currency strategist at Nordea in Copenhagen.
Well received bond sales from highly indebted euro zone
members Portugal and Spain this week and speculation that
European policymakers will boost their war chest against attacks
on euro zone sovereign debt also contributed to the currency's
better tone.
But the euro <EUR=>, which earlier rose to one month highs
against both the dollar and the Swiss franc, shed those gains
after China tightened reserve requirements by a further 50 basis
points. It was flat against the dollar at $1.3364 and versus the
Swiss franc <EURCHF=> it traded at 1.2873.
The dollar index <.DXY>, which tracks the greenback's
performance against a basket of major currencies, reversed
earlier losses to rise marginally to 79.219.
STOCKS TICK LOWER
The pan-European FTSEurofirst 300 <> dropped 0.7
percent, pressured by miners as copper prices <CMCU3> fell 0.7
percent. Oil <CLc1> was lower for the second day in a row, down
1 percent.
However, European tech stocks <.SX8P> offered some support
after U.S. heavyweight Intel <INTC.O> posted better than
expected quarterly earnings overnight. Intel shares in Frankfurt
rose 2.7 percent, and futures on the tech-heavy Nasdaq <NDc1>
were flat.
"Intel's good comments on server sales, coupled with
positive SAP <SAPG.DE> statement late yesterday, indicate that
corporations investment activity has been good in the fourth
quarter," Pohjola analyst Hannu Rauhala says.
MSCI All-Country World Index <.MIWD00000PUS> drifted 0.2
percent lower, after hitting a fresh 28-month high in the
previous session.
Japan's Nikkei average <> fell 0.9 percent after a
surprisingly weak settlement of options for January and a
stronger yen against the dollar trigger profit-taking.
(Additional reporting by Jessica Mortimer and Emelia Sithole
in London, Tarmo Virki in Helsinki and Ian Chua in Sydney;
Editing by John Stonestreet)
