Euro slips on Greek delay

The euro dipped and a share market rally ran out steam today on signs euro zone officials might delay Greece's next rescue package, while still avoiding a disorderly default.

The single currency eased 0.3 per cent, falling back below $1.31 after EU sources said euro zone finance ministers were not satisfied all Greece's political parties were committed to fresh austerity measures and might withhold bailout funds until April.

European shares shed some of their gains though US futures still pointed to a higher opening on Wall Street, with the release of January factory output and capacity utilisation figures later in the day expected to add to signs of economic improvement.

Riskier assets like equities had resumed their rally earlier today on hopes a growing flood of money from major central banks will support growth as data showed the euro zone's debt-laden economy headed - as expected - for a recession.

Sentiment was also supported by promises by Chinese leaders to keep investing in euro zone debt.

The euro fell to $1.3084, retreating from a session high of $1.3191 and well off the February 9th peak of $1.3322.

Economic output in the 17-country euro zone fell a widely-expected 0.3 per cent in the last three months of 2011 compared to the previous quarter, and is likely to contract further in the current quarter to mark its second recession in three years.

But the French economy posted a surprise expansion in the last quarter of 2011 and a slowdown in Europe's biggest economy, Germany, was not quite as bad as expected.

"Activity remains close to very weak levels but at least the (European) economy doesn't seem to be on a free-fall," said Annalisa Piazza, market economist at Newedge Strategy.

Marco Valli, chief euro zone economist at UniCredit Research noted that forward-looking indicators like surveys of purchasing managers show that the economy is likely to stabilise or resume moderate expansion in the first three months of 2012.

The FTSEurofirst index of top European companies was up 0.9 per cent at 1,079.13 points today while, helped by gains in Asia, the MSCI global index was up 0.6 per cent.

The gains in Asia came as central bank governor Zhou Xiaochuan reiterated commitments by premier Wen Jiabao that China was ready to play a bigger role in solving Europe's debt problems.

Demand for stocks and riskier currencies, however, remains tempered by the ongoing risks from the euro zone debt crisis.

In Greece, the conservative New Democracy party said its leader, Antonis Samaras, had sent a letter to the European Union and IMF committing himself to implementing a new austerity package, which was a key condition to secure approval of a €130 billion bailout.

Meanwhile oil prices gained over $2 a barrel today, after Iranian state TV said Iran had stopped exports to six European states in retaliation for European Union sanctions on the Islamic state, adding to supply concerns.

Brent crude was up 65 cents at $118.00 a barrel, having traded as high as $118.30 earlier in the session. US crude rose 87 cents to $101.61.

Reuters