Global stocks trim losses before ECB update

World stock markets trimmed recent sharp losses Thursday before a key European Central Bank policy meeting amid mounting concerns over the eurozone debt crisis and weakness in the US economy.The yen tumbled against the dollar and euro after Japan's government intervened to curb the unit's persistent strength, which it said threatened the nation's post-earthquake recovery. Traders meanwhile awaited monetary policy announcements from the ECB and Bank of England due Thursday, a day before the United States publishes vital employment data. "It's all doom and gloom for the markets at the moment but at least ... things look just a little bit better after US markets recovered slightly (overnight) from their lows," said Simon Denham, head of Capital Spreads trading group."In order to turn things round we're going to need something spectacular from (Friday's US) non-farm payroll" figures, he said.In stock market trade, London's benchmark FTSE 100 index fell 0.68 percent approaching midday, giving back early gains.Frankfurt dipped 0.05 percent, Paris slipped 0.14 percent and Milan shed 0.51 percent. Madrid rose 0.58 percent following a successful bond auction by the Spanish government. The dollar soared to 79.57 yen from 76.97 yen in New York late Wednesday, while the euro was lower at $1.4248. The price of gold, viewed as a safe haven investment in troubled economic times, traded at $1,663 an ounce on the London Bullion Market, off Wednesday's record high. "Financial markets (Wednesday) continued to be rocked by a perfect storm of poor economic data, sovereign debt risk and political turmoil as equity markets in the US and Europe hit multi-month lows on fears that the global recovery is grinding to a halt amid a growing solvency crisis," said Michael Hewson, analyst at CMC Markets.Hewson said the markets were looking at the central banks "as the last man standing to prevent a complete market meltdown in Europe."Investors will be watching for whether the ECB resumes a policy of buying bonds issued by some of the weaker eurozone states so as to help ease the market pressures on them. "A revival of the ECB’s securities markets program (SMP) is the only real option that would prevent a liquidity crisis for Spain and Italy," Goldman Sachs economist Dirk Schumacher said. Spain paid sharply higher rates to sell 3.311 billion euros in government bonds on Thursday, a major test in a widening eurozone debt crisis.Spain's debt risk premium jumped to a record high Wednesday, forcing the prime minister to interrupt his holiday for a crisis meeting on the market turmoil.The premium demanded for Spanish 10-year bonds over safe-bet German bonds surged Wednesday to 407 basis points -- the highest since the introduction of the euro in 1999 -- before easing.The ECB is meanwhile expected to keep its main lending rate at 1.50 percent after two hikes so far this year and while analysts want to know if it will be raised again in 2011, they are now most concerned about what can be done to contain the debt crisis.In London, the Bank of England is tipped to maintain its main interest rate at a record-low 0.50 percent due to weak economic growth. Earlier on Thursday, the Bank of Japan voted to keep its key rate unchanged between zero and 0.1 percent. Most Asian stock markets closed lower on Thursday but Tokyo finished in positive territory.