World shares slip as growth concerns re-emerge

LONDON (Reuters) - World shares slipped while safe-haven bonds and gold firmed on Wednesday as poor economic data from Europe rekindled investors' caution about the health of the global economy.

The euro was under pressure following weak German GDP figures on Tuesday and a warning from the chairman of the euro zone finance ministers' group, Jean-Claude Juncker, that the common currency was now "dangerously high".

Germany's economy shrank at the fastest pace in almost three years in the final part of 2012, and data on Wednesday showed demand for new cars in Europe fell in December to the lowest level since 1995.

"Following the German growth numbers yesterday there is simply a realization the recession in the euro zone in the fourth quarter will be much bigger than the previous consensus and that is pushing up German (bond) yields and putting downward pressure on equities," said Daiwa Securities economist Tobias Blattner.

The MSCI world equity index <.miwd00000pus> was down 0.3 percent at around 349 points, while Europe's FTSE Eurofirst 300 index <.fteu3> of top shares dipped roughly 0.2 percent in choppy early trade to 1,158.52 points.

London's FTSE 100 <.ftse>, Paris's CAC-40 <.fchi> and Frankfurt's DAX <.gdaxi> were flat to 0.3 percent lower.

Following the data and Juncker's comments, the euro was roughly 0.2 percent lower against the dollar at $1.3283 by 0815 GMT down 1 percent against the yen at 116.95 yen.

The yen - which had been sharply sliding against the dollar in recent weeks on expectations of aggressive Japanese policy easing under new Prime Minister Shinzo Abe - rose for a second day after a Japanese cabinet minister warned of the possible harm of excessive yen weakness.

Bond markets in Europe were largely quiet before Germany's first sale of the year of benchmark 10-year bonds.

Bund yields, which have risen to attractive levels compared with recent months, are expected to draw in buyers. Yields rose as much as 23 basis points during early January before retracing slightly as buyers re-emerged.

Wall Street posted modest gains on Tuesday after encouraging retail sales data although futures prices point to it giving back some of those gains on Wednesday.

Asian markets largely struggled, with Japan's benchmark Nikkei stock average <.n225> shedding 2.6 percent in its largest daily fall in eight months.

Assets traditionally viewed as offering protection against risk have been boosted this week as U.S. political wrangling has begun again over raising its self-imposed debt limit.

Spot gold was up 0.2 percent to $1,681.55 an ounce, underpinned by the jitters, and the benchmark gold futures contract on the Tokyo Commodity Exchange hit a record high for a third consecutive session.

U.S. crude was up 0.2 percent to $93.44 a barrel while Brent was up 0.3 percent to $110.61.

(editing by David Stamp)

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