World shares stabilised on Monday after three straight sessions of losses as firmer Chinese data helped to offset concerns about a possible U.S. fiscal crisis and delays to an instalment of Greek aid.
The data showing Chinese exports picked up sharply in October, signalling the giant economy was gathering strength, gave investors some encouragement. However, this was partly undermined by Japan, which reported its economy had shrunk 0.9 percent in third quarter, and was heading into a mild recession.
The MSCI world equity index <.MIWD00000PUS> was down just 0.04 percent at 322.15 points by 1300 GMT following the three days of losses last week, and U.S. stock index futures pointed to a modestly firmer start on Wall Street.
"Any bit of positive news from China will swing things upward here," said Oliver Purshe, president at Gary Goldberg Financial Services in Suffern, New York. "There's a little bit of pent-up desire to bounce back today."
The S&P 500 futures contract and the Nasdaq 100 futures were up 0.35 percent, while the Dow Jones futures were up 0.3 percent.
However, gains were likely to be limited due to the looming budget crisis in Washington. "Investors remain consumed by U.S. fiscal cliff consequences, and this is capping market enthusiasm," said Tim Waterer, senior trader at CMC Markets.
With the U.S. bond market closed for the Veterans Day holiday and euro zone finance ministers gathering in Brussels to discuss the Greek bailout programme, activity for the remainder of the day was expected to be light.
In Europe the FTSEurofirst 300 Index <.FTEU3> was flat at 1,096.80 by the midsession, steadying after last week's 1.6 percent drop. London's FTSE 100 <.FTSE>, Paris's CAC-40 <.FCHI> and Frankfurt's DAX <.GDAXI> traded between 0.1 percent up and 0.3 percent higher. <.L> <.EU>
The foreign exchange market was focused on the Eurogroup meeting which will not be authorising another instalment of money for Greece on Monday, but could agree to give Athens two more years to meet the goals needed to release the funds.
Pressure for a deal on Greece is growing because Athens has to redeem 5 billion euros' worth of treasury bills this week and had been counting on cash from the next aid tranche to help cover that.
The euro was virtually flat at $1.2715 before the meeting, near a two-month low of $1.2690 struck on Friday, with little gain seen coming from Sunday's approval by the Greek parliament of a tough 2013 budget.
"The key issue will be what comes out of the Eurogroup meeting. If the tranche is released, it is positive for risk and we should see a reasonable bounce in the euro, given the pessimism that's been built into the markets about the euro area," said Raghav Subbarao, FX strategist at Barclays.
However, many people in the market had low expectations for what could emerge from the meeting. "I think we've seen too many finance ministers' meetings over the course of the last two or three years to have any great expectations," Peter Dixon, global equities economist at Commerzbank, said.
Any rise in the common currency could be short-lived as data this week is expected to show a slowdown in German economic growth and France slipping into recession.
The uncertainty over the Greek aid talks and the U.S. budget supported German government bonds, with 10-year yields steady at 1.35 percent.
European credit markets were also flat with the iTraxx main index, made up of 125 investment-grade bonds, 0.4 basis points wider at 131 basis points.
Since the U.S. elections, investors have worried that the return of the status quo in Washington will make it difficult for lawmakers to reach the compromises needed to avoid the "fiscal cliff" at the end of the year, when nearly $600 billion worth of spending cuts and tax increases begin.
President Barack Obama was due to begin meetings with labour, business and civic leaders to find support for his plans to resolve the crisis this week, before talks with Congressional leaders who return to Washington after the holiday weekend.
The dollar pushed up to near a two-month high against a basket of currencies <.DXY> as the concerns about the budget dispute encouraged investors to move into the safe-haven currency. Speculators favoured the dollar in the latest week for the first time since early September, according to data from the Commodity Futures Trading Commission.
But the yen took its share of the demand and one dollar bought 79.44 yen on Monday, unchanged from Friday when the U.S. currency fell to its weakest in nearly three weeks.
In the oil market worries about the danger of the United States, the world's top oil consumer, tipping into recession as a result of the fiscal cliff and the weak Japanese data were checked by the strong Chinese trade numbers.
Brent crude oil futures rose 5 cents to $109.45 by 1230 GMT, after gaining more than 2 percent on Friday. U.S. oil was up 7 cents at $86.14 after finishing up more than 1 percent last week to end a three-week slide.
Gold added 0.29 percent to $1,736.01, holding near a 3-week high around $1,738 on Friday and well above a 2-month low around $1,672 hit last week.
Tokyo today approved $10.7 billion in fresh spending to help boost Japan's limp economy, just weeks before an election the ruling party is expected ...