GLOBAL MARKETS-Europe steadies after risk aversion sweeps Asia

    * Snow-blasted Wall Street expected to edge higher, 
    * European shares firm after Asian markets roiled 
    * Euro runs into profit-taking, yen gets a lift 
    * Gold bounce continues, oil nurses losses on supply outlook 
 
    By Marc Jones 
    LONDON, Jan 3 (Reuters) - European stock markets resisted a 
wave of risk aversion that had swept across Asia on Friday, but 
the euro weakened as the yen and gold held onto most of their 
early gains. 
    Wall Street, in the grip of a snowstorm, was expected to see 
a quiet open after Thursday's poor start to 2014. With little 
data on tap, the focus will be on a speech by outgoing Federal 
Reserve Chairman Ben Bernanke for any fresh details on the 
bank's plans for stimulus withdrawal. 
    In Asia, where stocks suffered their toughest session in 
almost a month and a stack of major currencies fell against the 
safe-haven yen, investors had taken fright at more weak data 
from Beijing. 
    A measure of activity in China's services sector slipped 
back in December, just as one for manufacturing had on Thursday. 
       
    "Asian activity was interesting because we had the PMI 
number from China which was disappointing," said Rabobank 
currency strategist Jane Foley. "The Asian stock markets came 
off and consistent with that there was some yen buying." 
    European stocks fared better as global manufacturing ended 
2013 on a strong note with the United States, Japan and Germany 
all seeing demand pick up.  TOP/CEN  
    Having tumbled on Thursday and seen an indecisive start to 
Friday, the benchmark FTSEurofirst 300 index    rose 0.4 
percent, also helped by some upbeat Christmas retailers and weak 
euro zone lending data likely to keep easing on the ECB's 
agenda.  .EU  
  <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
   Asset returns in 2013:       http://link.reuters.com/dub25t 
   Currencies v dollar in 2013  http://link.reuters.com/tak27s 
   World interest rates:       http://link.reuters.com/xyb96s 
  ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
     
    EURO WOES 
    The euro weakened as speculators booked profits on long 
positions after a strong 2013. Having spent much of the day 
testing a six-week low, the common currency had recovered 
slightly to 1.3652    by mid-afternoon. 
    The same forces gripped sterling, another strong performer 
in recent months. The pound peeled away to $1.6424    from a 
28-month peak of $1.6605 amid a slump in UK business lending. 
   
    The yen enjoyed a short-covering bounce. Borrowing in yen to 
buy higher-yielding assets has been a popular trade, leaving the 
market vulnerable to sudden, if usually brief, reversals. 
    The dollar came off to 104.35 yen    after rising as 
high as 105.44 on Thursday, its strongest since October 2008. 
The euro retreated as low as 142.10 yen    from a peak of 
145.12 on Thursday. 
    "The yen is strong because it remains the major currency 
market's best proxy for risk, so when you have a strong 
correction lower in risk appetite that sees the yen supported," 
said John Hardy head of FX strategy for Saxo bank in Copenhagen. 
    "I suspect it is a bit of a knee-jerk consolidation at the 
start of the year, but it is interesting that it started that 
way 
     
    GOLD SHINES 
    Another source of anxiety in Asia had been Thailand. Growing 
political uncertainty lopped another 0.5 percent off stocks 
there after a 5 percent decline on Thursday   . The Thai 
currency also took a bath, hitting its lowest since early 2010 
at 33.03 per dollar   . 
    However, as the tensions wore off in Europe, bond markets 
found their recent rhythm again. 
    The short-covering pressure that had extended to U.S. 
Treasury debt started to ease allowing yields on the 10-year 
note to edge back up to a fraction below 3 percent having topped 
at 3.04 on Thursday, it's highest since mid-2011.  
    German and other top-rated European government bonds largely 
mirrored the moves, while Spanish yields hit their lowest level 
since September 2010 as encouraging jobless data boosted 
sentiment. GVD/EUR   
    Oil prices also steadied after taking a fall on Thursday as 
Libya prepared to restart a major oilfield and on speculation of 
a sharp rise in crude stockpiles in the United States. 
    Brent crude    levelled off at $107.78 a barrel but 
that followed a drop of $2.98 on Thursday. U.S. crude    was 
off 13 cents at $95.30, after shedding almost $5 the day before. 
    Gold was another beaten-down asset to get a reprieve, along 
with silver    and platinum   . Bullion had swung up to 
$1,230   , from as low as $1,183.80 early in the week.  
    "Positive bullion prices in reaction to the decline in 
equities may set the tone for 2014 and reinforce the negative 
correlation between the two," HSBC analysts said in a note.     
 
 (Additional reporting by Wayne Cole in Sydney; Editing by John 
Stonestreet) 
 ((marc.jones@thomsonreuters.com)(+44)(0)(207 542 9033)(Reuters 
Messaging: marc.jones.thomsonreuters.com@reuters.net)) 
  
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Keywords: MARKETS GLOBAL/