*

European shares inch down, Nikkei slips, S&P 500 futures

steady

*

China retail sales bounce, industrial output slows

*

Euro put on defensive by French political worries

*

SNB may cut rates to restrain franc gains on euro

(Update prices throughout)

By Lawrence White

LONDON, June 17 (Reuters) - Shares trickled lower on

Monday while the dollar held near 6-week highs as the febrile

political mood in France weighed on sentiment, while investors

awaited a string of central bank meetings in the region as well

as fresh U.S. economic data.

European stocks slipped again after heavy losses last week,

when French President Emmanuel Macron called a snap election

hoping to ward off gains by far right and leftist groups against

his centrist administration.

The benchmark STOXX index had eased into negative

territory by 1107 GMT, as concerns about the potential fiscal

fallout from the French election outweighed gains in tech and

bank stocks.

The closely watched spread between German and French

government bond yields stabilised in calmer trading, after

Macron's gamble triggered a flight to safety and pushed the gap

to its widest level since 2017.

European Central Bank policymakers told Reuters they had no

plans to launch emergency purchases of French bonds to calm the

market.

"A French challenge to the region's fiscal arrangements would

be problematic and have far-reaching implications," warned

analysts at JPMorgan. "At this stage, the situation in the

run-up to the first round of voting is still very fluid."

Central banks in Australia, Norway and the UK are all

expected to leave their interest rates unchanged at meetings

this week, though the Swiss National Bank (SNB) might ease given

the recent strength of the Swiss franc.

The dollar index, which tracks the U.S. currency

against a basket of six others, held around its highest since

May 2, driven mostly by weakness in the euro.

FRAGILE CHINA

Asian share markets fell as mixed Chinese economic news

underlined the country's fragile economic recovery.

While retail sales beat forecasts thanks to a holiday boost,

the flurry of data was otherwise largely negative, with Chinese

blue chips off 0.2% after industrial output and

fixed-asset investment both underwhelmed.

MSCI's broadest index of Asia-Pacific shares outside Japan

eased 0.26%.

U.S. shares looked set to follow the muted mood, with S&P

500 futures down slightly, while tech-heavy Nasdaq

futures added 0.1% as megacap stocks including Apple ( AAPL )

, Microsoft ( MSFT ) and Nvidia ( NVDA ) rose between

0.2% and 0.6%.

Analysts at Goldman Sachs have raised their year-end target

for the S&P 500 to 5,600, from 5,200 and the current 5,431.

"Our 2024 and 2025 earnings estimates remain unchanged but

stellar earnings growth by five mega-cap tech stocks have offset

the typical pattern of negative revisions to consensus EPS

estimates," they wrote in a note.

The main U.S. data this week will be May retail sales on

Tuesday, where a 0.4% bounce is expected after a 0.3% drop in

April. U.S. markets will be closed on Wednesday.

At least 10 Federal Reserve policymakers are due to speak

this week and will no doubt address the market's wagers for two

rate cuts this year.

While the Fed itself sounded a hawkish note last week, a

trio of soft inflation numbers led futures to price in a

76% chance of a cut as early as September and 50 basis points

of easing for the year.

The dollar was stable versus the yen at 157.45,

after briefly spiking above 158.00 on Friday when the BOJ said

it would start tapering bond buying a little later than many had

expected.

Japan's Nikkei fell 1.9% on Monday, with investors

now facing a six-week wait to hear details of the Bank of

Japan's next tightening steps.

In commodity markets, gold dipped 0.5% to $2,321 an ounce

, unwinding some of last week's 1.7% gain.

Oil prices held firm after the bumpy economic data from

China offset hopes for a boost to demand from the summer driving

season in the northern hemisphere.

Brent crude fell 3 cents to $82.59 a barrel as of

1122 GMT, while U.S. crude inched down to $78.42 per

barrel.