GLOBAL MARKETS-European shares, euro slip on growth, debt fears

* Euro STOXX 50 down 0.5 pct, FTSE, DAX, CAC down

* IMF warnings add to anxiety over global economic health

* Euro falls 0.2 percent to around $1.2859

* U.S. stocks fell 1 pct, Intel off 2.7 pct after downgrades

By Marc Jones

LONDON, Oct 10 (Reuters) - European shares fell for thethird day running on Wednesday and the euro came under freshpressure along with Spanish and Italian bonds as economicanxiety was compounded by stuttering progress in the euro zone'sbattle against its debt crisis.

After rallying between June and September, major marketsfrom equities to commodities have traded more cautiously inrecent weeks as the effect of central bank support has given wayto renewed growth and debt concerns.

In its semi-annual check on the world's financial health,the International Monetary Fund summed up the fears, saying theeuro zone's crisis was an increasing threat to global financialstability and that confidence was "very fragile".

There was also a warning that the plodding progress in theeuro zone meant European banks were likely to offload $2.8trillion in assets over the next two years to cut their riskexposure, a $200 billion increase on its last forecast.

The Euro STOXX 50 index of European bluechip firms

, which has lost over 2 percent in the last week, wasdown 0.5 percent at 2,461.74 points by 1015 GMT as it, like theeuro

, sagged on the IMF's comments.

London's FTSE, Frankfurt's DAXand France'sCACwere all down by mid-morning. The MSCI index ofglobal sharesslipped 0.3 percent after Japanesestocksslid 2 percent to a two-month low in Asiantrading.

Daiwa securities economist Tobias Blattner noted that theIMF cut its global growth forecasts for the second time sinceApril on Tuesday, undermining the effect of stimulus measuresannounced by the U.S. Federal Reserve, European Central Bank andother authorities.

"You see positive sentiment is slowly but surely fadingaway," he said, citing uncertainty in the United States overthe "fiscal cliff" - government spending cuts and tax rises dueto take effect early in 2013 unless Republicans and Democratscan agree alternative measures.

"The risks are probably the biggest in the U.S. because youdon't know the outcome of the presidential election whichobviously determines whether or not you can overcome the fiscalcliff. And you add to that the uncertainty in the euro zone,"said Blattner.


IMF growth forecasts:Greece vs Germany:Oil priced in euros:



With little sign of progress from the latest meeting of eurozone finance ministers in Luxembourg, markets largely brushedoff forecast-beating industrial production data from France andItaly, on top of Greece's first rise in industrial output inmore than four years.

U.S. stock index futures pointed to a flat opening on WallStreet

after aluminium major Alcoa

began the U.S. earnings season on Tuesday with warnings ofslowing demand.

In the currency markets, the dollar

firmed asinvestors looked to safe-haven assets. The euro, closely linkedto the region's debt troubles, slipped 0.2 percent to its lowestlevel since the start of the month.

Spanish bond yields were also rising as Madrid keeps marketsguessing over whether it will request an international bailout.

Violent protests against German ChancellorAngela Merkel when she visited Greece on Tuesday underlined howfar the debt crisis is from resolution.

Italy's borrowing costs edged up at a sale of one-year debtwhile Germany drew strong demand at its auction of five-yearbonds.

"Yields went up at the Italian auction, and everyone hastheir eyes on these. It's an indication that risk aversion is onthe rise again in Europe," said David Thebault, head ofquantitative sales trading, at Global Equities.� Following three-straight days of losses gold

steadiedat $1,762.62 an ounce.

Growth-sensitive commodities such as copper and aluminiumand currencies like the Australian dollar were again underpressure, while the retreat from riskier assets boosted Japanesegovernment bonds (JGB) and U.S. Treasuries.

Brent crude oil rose above $114 a barrel

as shellingalong the Turkey-Syria border, hostility between Iran and theWest, and an impending Israeli election made Middle East supplyworries outweigh those over global growth.

"The nuclear dispute with Iran is going to be an electionissue in Israel, and this might cause the price to rise incoming weeks, or at least support it," said Carsten Fritsch, oilanalyst at Commerzbank in Frankfurt.

(Additional reporting by Alice Baghdjian; editing by DavidStamp)

((marc.jones@thomsonreuters.com)(+44)(0)(207 542 9033)(ReutersMessaging: marc.jones.thomsonreuters.com@reuters.net))

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