EU summit uncertainty keeps euro near 2-week low

FTSE Eurofirst 300 recoveres slightly after its biggest one-day fall in more than 3 weeks on Monday

The euro hovered near a two-week low while European shares edged higher on Tuesday, with investors uncertain that anything substantive will emerge from this week's European leaders summit to resolve the region's debt crisis.

A formal application by Spain for European funds - as Moody's cut the credit rating of 28 of its banks - and news that Cyprus had requested a bailout added to their anxiety.

"Investors want to see what direction the summit's outcome will point to. It's very unclear what specific agreements may actually be made," said Hirokazu Yuihama, a senior strategist at Daiwa Securities.

The euro stood at $1.2515, almost flat from late U.S. levels after falling as low as $1.2471 on Monday, its lowest since June 12.

The FTSE Eurofirst 300 index of top European shares was up 0.2 percent at 987.93 points in early trade, recovering slightly after its biggest one-day fall in more than three weeks on Monday.

Struggling debtor Spain will stay in focus as it is expected to pay its highest short-term borrowing rates in over six months when it auctions up to 3 billion euros of three- and six-month T-bills later in the day.

Italy will also sell zero-coupon and inflation-linked bonds later in the day and before European leaders meet on Thursday and Friday for their latest attempt to address the debt crisis, now in its third year.