*

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

steady

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China retail sales bounce, industrial output slows

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Euro put on defensive by French political worries

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SNB may cut rates to restrain franc gains on euro

(Updates for European market open)

By Lawrence White

LONDON, June 17 (Reuters) - Shares steadied on Monday

while the euro remained on the defensive amid political turmoil

in Europe, as investors look for direction from a string of

central bank meetings in the region this week as well as fresh

U.S. economic data.

European stocks recouped a fraction of their losses from

last week when French President Emmanuel Macron called a snap

election, with banks leading the mini-rally on Monday up 1%

against a 0.2% rise in the benchmark STOXX index.

Macron's surprise move came after far right and leftist

parties gained ground against his centrist administration,

raising investor concerns about a budget crisis and triggering a

brutal selloff in French markets.

The euro has become emblematic of this angst,

down 0.04% to $1.07025, after falling to its lowest since May 1

at $1.06678 on Friday.

European Central Bank policymakers told Reuters they had no

plans to launch emergency purchases of French bonds to stabilise

the market after yield spreads over German bunds widened

dramatically amid a flight to safety.

"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 hold rates steady at meetings this week, though the

Swiss National Bank (SNB) might ease given the recent strength

of the Swiss franc.

Markets have boosted the probability of a cut to 75% as

political uncertainty in France drove the euro to a four-month

trough at 0.9505 francs on Friday.

FRAGILE CHINA

Asian share markets had earlier fallen 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.

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

500 futures steady, while Nasdaq futures added

0.1% following a run of record finishes.

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 of the week will be retail sales for May

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

April, while markets have a holiday on Wednesday.

At least 10 policymakers from the Federal Reserve 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 on 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

wagered on.

Japan's Nikkei slipped 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% bounce.

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 rose 2 cents to $82.64 a barrel as of 0812

GMT, while U.S. crude likewise nudged up to $78.49 per

barrel.