Stocks steady after China stimulus, euro hurt by Greek woes

By Hideyuki Sano

TOKYO (Reuters) - Asian stocks were firm on Tuesday after China's latest step to prop up its faltering economy lifted global equities, while the euro was pressured on growing worries a cash-strapped Greece may default on its debt.

MSCI's broadest index of Asia-Pacific shares outside Japan was steady, with the dollar's gains against some Asian currencies offsetting a rise in stock prices in local currency terms.

Japan's Nikkei <.N225> and South Korean shares each added 0.2 percent , while Australian shares rose 0.4 percent <.AXJO>.

The Chinese central bank on Sunday cut the amount of cash banks must hold as reserves in its latest attempt to spur lending and combat a slowing economy. The news followed reports last week about a crackdown on margin lending there, which had sent global equity markets lower on Friday.

"China's action undid the damage caused by the crackdown (on speculative buying in Chinese stocks on Friday)," said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

"Chinese authorities seem to be worried that the stock markets are rallying despite weak economic fundamentals... There could be more stimulus down the road."

The China stimulus news helped to life European and U.S. shares on Monday. The S&P 500 index rose 0.9 percent.

However, many investors are likely to be cautious about chasing shares higher ahead of corporate earnings and the continued uncertainty over Greece.

Mounting worries that Greece could default on its debt payment are hurting the euro.

The euro traded at $1.0740 , off Friday's peak of $1.0849. Against the safe-haven Swiss franc, it hit a near three-month low of 1.02355 franc on Monday and last stood at 1.0268 .

Investors are growing pessimistic that Greece will not be able to present detailed plans that would satisfy euro zone finance ministers to continue their financial support at their meeting on Friday.

This means Greece could be running out of cash by the end of this month.

On Monday Greece ordered state entities to park idle cash at the central bank in a scramble to pay its bills ahead of civil services salary payments at the end of April and IMF loan payments early May.

While an unprecedented debt default in the currency bloc could open the way for Greece to exit the euro, ECB Vice President Vitor Constancio said on Monday that a country that defaults would not have to leave the euro.

Oil prices held near their four-month high hit last week, as a report of strong U.S. consumption last week and a warning from Saudi Arabia's Interior Ministry about possible attacks on energy installations there offset earlier comments indicating Saudi production would stay near record levels in April.

U.S. crude futures stood at $56.34 per barrel, not far from a four-month high of $57.42 (39 pound) hit on Thursday.

(Editing by Shri Navaratnam)