Greek bond talks, Portugal debt sale in focus

Fears over the outcome of crucial Greek debt restructuring talks pulled the euro off its recent highs and put share markets on the retreat on Wednesday, overshadowing signals this week that the global economy may not slow as much as feared.

International creditors are set to meet the Greek government later on Wednesday to resume talks that broke down last week over the interest rate Greece will offer on new bonds and a plan to enforce private investor losses.

A deal with the private sector is vital to cash-strapped Athens if it is to gain its next batch of international aid and avoid going bankrupt when 14.5 billion euros ($18.5 billion) of bond redemptions fall due in late March.

"Greek bond negotiations could trigger more euro weakness as they have to close a deal soon, before Greek debt repayments are due in March," Richard Falkenhall, currency strategist at SEB in Stockholm said.

The euro traded around $1.2755, slightly up on the day but below a session high of $1.2808 and in range of the $1.2624 low hit on Friday, its weakest rate since last August.

Analysts said European share markets were still looking for reasons to go higher after economic data from China and Germany on Tuesday encouraged hopes that the outlook was improving and prodded shares to 5-1/2-month highs.

"Global stocks are still over sold and have room to grow on further good news," said Tom Elliott, global strategist at JP Morgan Asset Management.

The concern over the euro zone's debt crisis kept the FTSEurofirst 300 index of top European shares in negative territory on Wednesday, however, down about 0.6 percent at 1,028.35 points.