minded Prime Minister Junichiro Koizumi. But Shinji Igarashi, equity sales manager at Chuo Securities, said the market would likely be supported by retail investors even if foreign buying lost its momentum. For the time being, though, foreign investor interest remains strong -- a factor which helped the yen to claw back most of its losses last week against the dollar. "The yen is benefiting from Japanese stock markets and capital flows into the Japan growth story looks good," said Carsten Fritsch, currency strategist at Commerzbank in Frankfurt. In thin trading, the yen recovered to about 109.65, having traded a little under 111 at the end of last week. The euro changed hands for around $1.2185, up slightly on the day. The FTSEurofirst 300 index of leading European shares put on 0.1 percent to 1,195.4 points. Capping the upside were leading drug stocks such as GlaxoSmithkline, Novartis and AstraZeneca which fell due to litigation risk worries after a Texas jury found U.S. peer Merck & Co. liable in the death of a man who took its popular painkiller Vioxx. "This highlights the risk of litigation in the sector," said Max Herrmann, a drugs analyst at ING. "Glaxo has a Cox-2 inhibitor drug in development, and the company has to prove this drug does not have the same safety risks as Vioxx. U.S. stock index futures indicated a positive start to trade on Wall Street after U.S. stocks ended little changed on Friday, despite a near-8 percent drop in Dow component Merck & Co. U.S. Treasuries drifted down and were expected to face a quiet week before a key speech from Federal Reserve Chairman Alan Greenspan speaks on Friday, which investors hope will yield more clues on the inflation risks and monetary policy outlook. Benchmark U.S. 10-year Treasury yields were trading at around 4.225 percent while comparable 10-year euro zone government bonds yielded 3.19 percent. Gold bounced off a two-week low and traded at around $437.5 a troy ounce. --SP 1342 Local Time 1042 GMT
