GLOBAL MARKETS- Growth concerns and Europe's woes hit shares, euro

* European shares fall on earnings impact of weaker growthoutlook

* Oil jumps on supply concerns as Middle East tension mounts * Uncertainty over Spain and Greece pressures euro By Richard Hubbard

LONDON, Oct 9 (Reuters) - A stark warning from the IMF aboutthe global growth outlook and the prospects for Spain and Greecesent European stocks and the single currency lower on Tuesday,while oil rose on escalating tensions in the Middle East.

The gloomy IMF report came as riskier asset markets likeequities are on the hunt for signs of improving economicactivity after prices rose sharply last month when the world'smajor central banks eased policy aggressively.

The weaker outlook from the IMF and its potential to affectcorporate earnings sent the FTSEurofirst 300 index oftop European shares down 0.2 percent to 1,098.80 points, addingto a loss of 1 percent on Monday.

The euro zone's blue chip Euro STOXX 50 indexwas down 0.4 percent to 2,486.36 points.

"The main driver for the market is the IMF report on Greeceand they also have a more negative view on Spain, which raisesquestions about whether the budget deficit targets for next yearwill be achieved," said RIA Capital Markets strategist NickStamenkovic.

In its latest World Economic Outlook, the InternationalMonetary Fund cut its 2012 global growth forecast to 3.3 percentfrom the 3.5 percent expected in its July report.

The IMF also warned that any failure by policymakers in theUnited States and Europe to fix their economic problems couldeven prolong the current slump.

World shares as measured by the MSCI world equity index

fell 0.2 percent.

European Central Bank President Mario Draghi added hisweight to the growth concerns, telling European lawmakersmeeting in Luxembourg he expected weak activity to continue withthe risks to even this forecast on the downside.

"Some things have improved in the last to two or threemonths, but I think the road ahead is still long and it'suphill," Draghi said.

The growth worries offset a slightly more positive mood inAsian markets which followed China's injection of around $42billion of cash into its money markets. That boosted speculationits central bank may soon do more to support slowing growth.

The MSCI index of Asia-Pacific shares outside Japan

added 0.5 percent, pulled higher by rises inHong Kong and China shares after the move.

"Given the softness in the economy and given where inflationis, there is certainly scope for China to be more active on thepolicy front," said Ian Richards, global head of equitiesstrategy at Exane BNP Paribas.


Apart from the IMF report, the focus in Europe was on asummit of finance ministers and a visit to Athens by the GermanChancellor Angela Merkel, closely watched for signs of progressin resolving the region's debt crisis.

The finance ministers and the IMF were reported on Monday tohave held a "thorough and robust" debate on Greece, but failedto make significant progress in deciding how best to get thecountry back on track with its bailout programme.

Greece is locked in talks with its "troika" of lenders - theEuropean Union, European Central Bank and International MonetaryFund - to secure the next tranche of a 130-billion-euro($170-billion) loan package, its second bailout since 2010.

Without the next 31.5-billion-euro payment, Greece says itwill run out of money by the end of November.

The finance ministers also appeared to dash market hopes ofan early bailout request from Spain by saying the country wastaking steps to overhaul its economy, and successfully fundingitself in the financial markets.

Investors are waiting for Spain's bailout request as itwould trigger a new round of bond buying by the ECB which wouldlikely lift the euro and send Spanish bond yields sharply lower.

"While uncertainty about Spain plays out, investors are alsogetting worried about the Greek situation," said Adam Myers,senior currency strategist at Credit Agricole.

The lack of progress on both fronts saw the euro fall to$1.2907 , well below a two-week high of $1.3072 hit onFriday. Spanish 10-year yields ES10YT=TWEB were up 5 basispoints at 5.78 percent.

Attention in the oil markets was on the deterioratingsituation in Syria and a warning from Turkish President AbdullahGul that the worst case scenarios between his country and Syriaare now playing out.

Turkey's armed forces have bolstered their presence alongthe 900-km (560-mile) border with Syria in recent days and havebeen responding in kind to gunfire and shelling spilling acrossfrom the troubled country.

"Right now the market is concerned about the continuingconflict between Syria and Turkey, and the worry is that if itescalates, it may disrupt supplies," said Ker Chung Yang, seniorinvestment analyst at Phillip Futures in Singapore.

The most active Brent futures contract was up 0.5percent to $112.71 per barrel while its premium over U.S. oil

jumped to around $22.50 per barrel, the highest sinceOct. 20 last year.

(Additional reporting by Ramya Venugopal in Singapore and;Editing by Peter Graff)

((richard.hubbard@thomsonreuters.com)(Tel +44 207 5423215))