European shares dip amid Greece uncertainity

Pan-European FTSEurofirst 300 stock index gives up modest early gains, down 0.2%

European shares dipped on Tuesday while German bond yields rose, with investors in the dark over whether a high-level meeting on Greece's debt crisis might herald a significant breakthrough.

The dollar hit a 12 1/2-year high against the yen in Asian trade before pulling back to trade down against the Japanese currency and the euro.

The leaders of Germany, France and Greece's international creditors agreed late on Monday to work with "real intensity" as they try to reach a deal that would prevent Athens from defaulting and potentially leaving the euro zone.

"The fact that five such political and financial heavyweights met about Greece means they are trying to force a break in the political deadlock and that's a positive development that's likely to lift risk sentiment. But we will have to wait to see the Greek reaction," said KBC strategist Mathias van der Jeugt.

Athens is due to make a 300 million euro debt repayment to the International Monetary Fund on Friday.

Greek Labour Minister Panos Skourletis told Skai TV his government could make no more concessions.

The pan-European FTSEurofirst 300 stock index gave up modest early gains and was down 0.2%.

"The real money is still sitting on the sidelines because God knows what's going to happen to Greece," Justin Haque, a trader at brokerage Hobart, said.

Greek shares were up 0.6%.

German 10-year bond yields rose 6.6 basis points to 0.58%.

"We still expect at least a partial compromise to be reached soon, possibly this week, but the risk of an accident is higher than ever," said Philippe Gudin, economist at Barclays

Earlier, Asian shares fell for a second day as a strong dollar weighed on commodity prices.

MSCI's main index of Asia-Pacific shares, excluding Japan, fell 0.8% and Tokyo's Nikkei closed down 0.1%.

China's CSI300 index of the biggest listed companies in Shanghai and Shenzhen rose 1.7%. After rising almost 5% on Monday, Chinese indexes have regained nearly all the ground lost in a sell-off last Thursday.

US shares made modest gains on Monday as stock investors took heart from data on Monday showing U.S. factory activity picking up and construction spending hitting its highest in nearly 6 1/2 years.

The dollar rose to more than 125 yen for the first time since late 2002, peaking at 125.07, before pulling back.

"The rise in the dollar against the yen has been steep but sentiment favours testing new highs rather than consolidating," said Kyosuke Suzuki, director of foreign exchange at Societe Generale in Tokyo.

The dollar was last down 0.3% at 124.46 yen. The euro was up 0.3 at $1.0956.

AUSSIE

The Australian dollar was up 1.3% at $0.7701 after the Reserve Bank of Australia kept interest rates steady and did not offer a clear bias to ease policy again.

Oil prices rose as strong demand outweighed expectations the Organization of the Petroleum Exporting Countries (OPEC) would not cut production when it meets in Vienna on Friday. Brent crude was up 43 cents at $65.31 a barrel.

Gold held steady at $1,187.70 an ounce, dropping from Monday's peak above $1,200, pressured by the strong dollar.