World stocks steadied below this week's 4-1/2 week high on Tuesday while the euro fell as worries about further monetary tightening in China and uncertainty over the euro zone and U.S. economic outlook made investors cautious, according to Reuters. Speculation about a possible rate rise in China this weekend curbed a pick-up in demand for risky assets since last week as did a Moody's report saying the scale of problem loans at local governments in China may be much bigger than previously thought. In the euro zone, a survey showed growth in the region's dominant service sector slowed for a third straight month in June, and by more than an initial estimate, with sluggish new orders dimming the outlook. Investors were also waiting to see more evidence the U.S. economic recovery is gaining momentum before taking on more risks, especially after world stocks, measured by MSCI, posted their best weekly gain in a year last week. The MSCI world equity index was down slightly on the day, after hitting its highest since June 1 on Monday. The index has risen almost 5 percent since January. European stocks rose 0.1 percent while emerging stocks briefly hit a one-month high. U.S. stock futures pointed to a slightly firmer open on Wall Street which reopens later after the Independence Day holiday on Monday. U.S. crude oil fell 0.2 percent to $94.75 a barrel, in part hurt by the dollar which rose 0.3 percent against a basket of major currencies . German government bond futures rose 20 ticks. The euro fell 0.5 percent to $1.4472 after hitting a one-month high near $1.4580 on Monday. The single currency rose more than 2 percent last week, posting its best weekly performance since January. It suffered a brief setback on Monday after Standard & Poor's warned it would treat a rollover of privately held Greek sovereign debt now being discussed as a selective default. S&P's warning came after Greece secured a 12 billion euro loan that will prevent it defaulting in mid-July or August. But the focus is on a second assistance package likely to be about the same size as last year's 110 billion euro EU/IMF bailout. Greek Finance Minister Evangelos Venizelos told Reuters on Monday the country would stave off default not only for its own sake but because its survival is vital for the euro zone and the global economy. The euro's downside was limited thanks to expectations the European Central Bank would raise rates to 1.5 percent on Thursday and signal more tightening. -- SPA
