TOKYO (Business News) - Markets remained cautious on Monday despite world leaders calling for Greece to stay in the euro zone and for Europe to balance austerity with growth, with investors unwilling to take risks before Greek elections next month.
G8 leaders meeting at the weekend also vowed to take all necessary steps to combat financial turmoil and revitalize a global economy increasingly threatened by Europe's debt crisis. But they offered no specific prescription for extracting Athens from its worsening crisis.
"The G8 making clear its push for growth and stressing that balance is necessary is positive for the markets and give some sense of relief after Friday's nervous session," said Yuji Saito, director of foreign exchange at Credit Agricole Bank in Tokyo.
"But it does not offer a buying incentive for the euro, which had already seen short positions covered on Friday. Markets are shifting their focus to an upcoming European summit on May 23 and comments about the Greece election," he said.
The euro was trading down 0.2 percent at $ 1.2757 but off a four-month low of $ 1.2642 reached on Friday, which was not far from its trough of 2012.
Reflecting investor nerves, the yen, widely perceived as a safe haven, traded near its three-month high against the dollar of 79.001 yen hit on Friday. The yen stood at 79.10 early on Monday.
Japan's Nikkei stock average .N225 was set to fall on Monday, after shedding 3 percent on Friday to log a seventh straight week of losses, its longest such losing streak since the third quarter of 2011. .T
Australian shares .AXJO were likely to open flat after slumping to a six-month low last week.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell as much as 3 percent to its lowest this year on Friday. It posted its worst weekly performance in nearly eight months with a weekly loss of around 6 percent.
World s tocks erased the year's gains on Friday as investors fled risky investments for safe-haven assets on concerns about the euro zone's deepening debt woes.
Leaders of the G8 also raised the pressure on Iran on Saturday, signaling their readiness to tap into emergency oil stockpiles quickly this summer if tougher new sanctions on Tehran threatened to strain supplies.
Credit Agricole's Saito said news that Germany's largest industrial union, IG Metall, had agreed to a 4.3 percent pay rise from employers could imply more difficulty for the European Central Bank to aggressively ease monetary policy if the euro zone's largest economy was solid enough to raise wages.
IG Metall's pay rise was the biggest rise in wages in two decades, which would boost consumption in Europe's biggest economy, analysts said on Sunday.
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