By Marc Jones

LONDON, Feb 6 (Reuters) - The euro dipped and European

shares fell on Wednesday as investors waited to see if the

European Central Bank would respond to the currency's recent

jump after Germany said it was not overvalued.

U.S. stock index futures also pointed to a lower open on

Wall Street after the benchmark S&P 500's rally of more than 1

percent a day earlier.

The ECB is widely forecast to keep rates at a record low

0.75 percent when it meets on Thursday, but focus will be on

whether its policymakers are worried the euro's strength could

undermine any recovery in troubled economies like Spain.

Following complaints about the currency's level from France,

German Chancellor Angela Merkel's spokesman said the currency

was not overvalued and that competitiveness could not be

achieved via exchange rates.

Against the dollar, the euro was 0.5 percent lower at

$1.3516 by 1330 GMT but was well within this week's range of

$1.3450 to $1.3710.

Japan's yen, at the centre of concerns that some countries

are trying to devalue their currencies to boost growth, nearly

hit a three-year low earlier in the day on the view a new Bank

of Japan governor will ease policy aggressively once in office.

'Euro-dollar looks quite comfortable to the low to mid

1.35's and I think that is where we will stay ahead of

tomorrow's ECB meeting,' said National Australia Bank strategist

Gavin Friend.

'When you look at the big fall in the yen, it just interests

me whether they (ECB) see that as a disorderly move. It is

raising eyebrows around the world and the euro's rise is part of

that.'

The broadly stronger dollar touched 94.075 yen, its

highest since May 2010 before profit taking saw it drop back to

93.55 yen, while the euro also rose as high as 127.71

yen, its strongest since April 2010, before it also eased.

BOJ Governor Masaaki Shirakawa has said he will step down on

March 19, opening the way for a successor supporting the kind of

expansionary policies the government favours.

Global policymakers meet in Moscow next week. New Japanese

Prime Minister Shinzo Abe's support for aggressive easing does

not seem to have caused an outcry from other countries although

there have been sporadic complaints from Germany and South

Korea.

According to a Japanese government official, the IMF's

number two David Lipton said the BOJ has taken the right

direction in committing to a 2 percent inflation goal and its

next governor needs to show how that goal will be achieved.

GROWTH OPTIMISM

Having been up for most of the day, European shares fell

ahead of the U.S. open as profit taking ahead of the ECB's

meeting kicked in and concerns about banks and fragile politics

in the region returned.

European stocks led a global sell-off on Monday sparked by

worries over a corruption scandal in Spain and polls showing

Italy's former prime minister Silvio Berlusconi regaining ground

before elections this month.

'It doesn't feel like the correction threat has fully passed

in Europe,' said one European trader.

The pan-European FTSEurofirst 300 was down 0.5 percent by

1330 GMT having been up as much as 0.5 percent earlier in the

day after an upbeat outlook from the world's largest miner

ArcelorMittal boosted growth hopes.

German industrial figures also showed an 0.8 percent

month-on-month rise in orders in December, a rise the economy

ministry said showed the weakness in the sector was coming to an

end.

Despite the late selling in Europe, earlier rises in Asia

led by Japan, left the MSCI world share index in

positive territory and just below a 22-month high.

The slide in the yen helped Japanese equities reach their

highest since October 2008 while expectations of more monetary

easing pushed two-year Japanese government bond yields down to a nine-year low of 0.045 percent

The growing confidence in the global economic outlook also

supported oil prices and gave a boost to copper and a wide range

of precious metals on Wednesday.

Brent crude, which hit a 20-week high on Tuesday, was

trading around $116.30 a barrel down slightly on the

day, but some analysts expect it to test $120 a barrel this

month if there are no supply shocks.

'The markets are now more optimistic about the world

economy, so oil prices are heading up, but gradually,' said Ken

Hasegawa, a commodity sales manager at Newedge Group.

Gold slipped $2.04 an ounce to $1,670.56, a drop

partially triggered by an announcement from India, the world's

biggest consumer of the precious metal, that the central bank is

considering restrictions on imports by banks.

Investors will be looking out for China's trade numbers due

on Friday for more clues on the health of the global economy.

GERMAN DEMAND

In the European bond market, benchmark German Bund futures

remained slightly higher after Germany saw strong demand at a

sale of five-year debt. This was due to a recent rise in yields

and political uncertainty in Spain and Italy.

Corruption allegations in Spain have put Prime Minister

Mariano Rajoy under pressure and a scandal at one of Italy's

oldest banks has led to an increasingly uncertain outcome in

elections later in February.

'There are fairly ominous signs (in the periphery). I know

they (Italian and Spanish bonds) had a good day yesterday, but

there's Spanish supply coming up,' one trader said.

Financial and corporate credit spreads were modestly tighter

given the better tone in the equity markets and German

government bond prices.

The spread on the main iTraxx five-year index

- which measures the credit risk premium of a basket of high

quality European bonds - narrowed by around 2.0 percent.

The index touched its highest level for the year on Monday

in the selloff which hit all risk asset markets when growing

political uncertainty in Spain and Italy rattled investors.

(Additional reporting by Richard Hubbard; Editing by Anna

Willard)

((marc.jones@thomsonreuters.com)(+44)(0)(207 542 9033)(Reuters

Messaging: marc.jones.thomsonreuters.com@reuters.net))

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