* European shares hold at 21-month highs, lift off day's
* Wall Street set to open slightly lower
* Dollar dips vs peers on FBI director's dismissal
* Greek yields hit lowest since 2012 debt restructuring
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Nigel Stephenson
LONDON, May 10 European shares held at 21-month
highs on Wednesday, while the dollar fell on concerns that U.S.
President Donald Trump's dismissal of his FBI chief could make
passage of his tax reform plans more difficult.
Wall Street looked set to open lower, with index futures
down about 0.2 percent .
Expectation-beating first-quarter company results have
lifted stock markets across the globe, with European full-year
earnings forecasts set to be their best since 2010. The prospect
of U.S. tax cuts has also helped push shares higher.
At the same time, measures of market volatility are at
rock-bottom. The U.S. VIX index fell on Tuesday to 9.56,
its lowest since late 2006. [reut.rs/2pja9xd
However, Trump's abrupt sacking of FBI Director James Comey
marked a fresh intrusion of politics into markets after Emmanuel
Macron's weekend victory in the French presidential election had
seemed to clear the decks of major political risk, at least in
"This is a political story rather than a market story, but
yet again it creates uncertainty in the market, which leaves
everything the president does with a cloud floating over it,"
said James Hughes, chief markets analyst at GKFX in London.
The pan-European STOXX 600 index was fractionally
up on the day, having traded in the red for most of the morning,
weighed down by construction and materials stocks and by
Italian banks. The index hit its highest since
August 2015 on Tuesday.
Asian shares, however, edged up for a third consecutive day.
MSCI's main index of Asia-Pacific shares, excluding Japan
rising 0.1 percent, having earlier matched a
two-year high hit last week.
Twelve-month forward earnings-per-share for the index is at
its highest level in more than three years.
South Korean stocks led losers as investors took
profits after liberal leader Moon Jae-in was elected president,
while Chinese shares closed lower after factory gate prices in
the world's second-biggest economy cooled more than expected in
Tokyo shares hit a 17-month high, up 0.3 percent on
the day as a relatively weak yen outweighed concerns triggered
by Trump's sacking of Comey.
The U.S. president said he had fired Comey, who had been
leading an investigation into the Trump 2016 campaign's possible
collusion with Russia, over his handling of an email scandal
involving then-Democratic candidate Hillary Clinton.
The dollar fell 0.1 percent against a basket of major
currencies after slipping on the view that political
uncertainty could derail Trump's tax reform plans.
The yen, often sought in times of market uncertainty,
was last 0.2 percent higher at 113.79 to the dollar. The euro
was flat at $1.0868. The safe-haven Swiss franc also rose
against the euro and dollar.
Falling U.S. Treasury yields also weighed on the dollar.
Ten-year yields were down 3.1 basis points at 2.38
percent after retreating from five-week highs touched on Tuesday
as investors made room in their portfolios for new issuance of
government and corporate debt.
The most eye-catching move in euro zone government bond
markets was a fall in Greek 10-year yields to their lowest since
its debt was restructured in 2012.
Athens and its creditors reached a deal this month on
reforms that could trigger the release of more rescue funds.
"There is a relief that Greece will get its disbursements to
get through the summer, and that is the main driver of the bond
rally," ING's senior rates strategist Martin van Vliet said.
Oil prices rose after Saudi Arabia said it would cut
supplies to Asia and U.S. inventories fell more than expected.
Brent crude was last up 48 cents at $49.21 a barrel.
Gold rose 0.2 percent to $1,223 an ounce.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Saikat Chatterjee in Hong Kong, Jamie
McGeever, John Geddie in London; Editing by Andrew Heavens)