LONDON (Reuters) - World stocks gave up early gains Tuesday to hover around flat while the euro also fell ahead of crucial votes in the Greek parliament over austerity measures needed to stave off a debt default.
Wall Street looked set for a weak open, with stock futures pointing downwards and investors reluctant to take major bets before the parliamentary votes Wednesday and Thursday.
The austerity measures are required in order for Athens to receive more European Union and International Monetary Fund aid but popular opposition to austerity is strong, exemplified by a two-day general strike launched Tuesday.
While the market had earlier received some support from France's agreement with its banks to roll over some Greek debt and talk of a contingency plan if the austerity measures are not approved, the positive momentum soon dissipated.
Market players pointed to further problems down the line for the euro zone periphery.
"The question that is in the markets' mind is 'Will an EU debt rollover plan be enough to salvage Greece?' The focus will turn to data and if there are no signs of growth, the political will to do more on Greece will be very thin," said Neal Mellor, currency strategist at Bank of New York Mellon.
World shares as measured by MSCI .MIWD00000PUS were flat as was the FTSEurofirst 300 .FTEU3 index of top European shares. The latter was also hit by a 15 percent slump in telecom giant Cable & Wireless CWP.L after a profit warning.
Greek shares however rose 1.5 percent .ATG though they stayed just off 14-year lows hit recently.
Japan's Nikkei .N225 had earlier closed up three-quarters of a percent, lifted by the French plan which would see banks reinvesting 70 percent of proceeds when Greek bonds fall due in 2011-14 and cash out the rest.
But European Central Bank Executive Member Juergen Stark was cited in media reports as saying that Greece will receive further financial help only if it sticks to implementing austerity measures and that there were no alternate plans if the reforms were not approved.
In the United States, S&P500 futures were down 0.2 percent while Nasdaq and the Dow Jones slipped 0.1 percent each. Wall Street had risen Monday after three loss-making sessions.
The euro also gave up its early modest gains and traded down 0.1 percent at $1.4272, off the day's high of $1.4330 struck in early Asian trading.
The cost of insuring Greek debt against default rose. A parliamentary nod to the austerity proposals could give the euro a short-term boost, but if the measures are rejected, the euro could fall past its key psychological support level of $1.40, said Tom Levinson, currency strategist at ING.
"The alternative is the unthinkable. Greece's government would fall, with the wider implication that the euro zone debt crisis takes a major lurch worse, i.e. towards a Greek default," Levinson added.
Meanwhile, sterling fell to a 13-month low against a currency basket, dragged lower by weakness in the pound versus the euro and dismal data which backed expectations that interest rates will remain low this year.
On debt markets, German and U.S. bonds rose with Treasury futures rebounding from a sell-off in the previous session.
The Bund future was up 3 ticks at 126.93 after dipping in and out of negative territory in early trade and after the previous session's 55 ticks sell-off.
"Tomorrow is going to be a decisive day. If they approve the austerity measures, then we have a chance that the market could stabilise," said Klaus Wiener, chief economist at Generali Investments, which manages 330 billion euros (294 billion pounds).
"If not, we will have turmoil. The core yields will fall even more, peripheral spreads will widen even more and equities will lose ground."