The euro hovered near a two-year low today with investors worrying about Spain's banking problems, the outcome of the Greek elections and the health of the global economy.
Speculation that China may soon launch a stimulus programme to boost flagging growth and a view that US data later in the week will show the recovery in the world's top economy remains on track helped support equities and commodities.
"Equities are likely to be stuck on the 'risk on/risk off' merry-go-round until we get some more stability and clarity around the goings-on in Europe," Cameron Peacock, analyst at IG Markets, said.
The euro stood at $1.2555, near last week's two-year low of $1.2495.
European shares pared back earlier gains as persistent concern over the outlook for Spain's banking system capped early optimism over the possibility for further policy stimulus in China.
The FTSEurofirst 300 was up 0.1 percent at 984.52, well off a session high of 993.28. Spain's IBEX, meanwhile, was once again the regional laggard, down 1.9 per cent.
Spanish 10-year bond yields remained at elevated levels, just below 6.5 per cent, keeping fears alive that the country will no longer be able to afford to fund its spending.
A level above 7 per cent is widely seen as unsustainable and could force Spain to seek an international bailout, as did Ireland, Greece and Portugal.
Reuters