Signs that the International Monetary Fund is inching toward a deal to increase its ability to help contain the region's crisis, strong U.S. corporate earnings and a rise in the IMF's global growth forecast helped to limit any losses.

But with Italy set to delay by a year its plan to balance the budget in 2013, Spain due to sell fresh two- and 10-year bonds on Thursday and worries over France's presidential election rising, investors were reluctant to buy riskier assets.

"There is a lot of uncertainty in the market," said Lutz Karpowitz, currency strategist at Commerzbank.

The fears over Europe could be reflected in demand at a two-year German bond sale later, with some concern that the sale could struggle as safe-haven demand from investors has already driven yields to ultra-low levels.

The existing March 2014 bond was yielding only 0.15 percent in the secondary market on Wednesday, and 10-year bonds were only offering around 1.66 percent.

CORPORATE HEALTH

In equity markets the good demand for Spain's debt was providing some support to prices, as was a strong start to first quarter earnings reports from the United States, where around 75 percent of companies reporting so far have beaten analysts' estimates, according to Thomson Reuters data.

"If this can be maintained, it will be a good reminder and a timely reminder that while governments and individuals may be struggling, companies remain in good health," said Richard Hunter, head of UK equities at Hargreaves Lansdown.

The euro zone blue-chip Euro STOXX 50 index, which saw its biggest daily gain of the year on Tuesday, reversed early losses to be up 0.1 percent at 2,429.26. The FTSE Eurofirst index of top European shares was largely unchanged around 1052.90.

The euro was being kept under pressure by worries about Spain's fiscal problems and its debt sale on Thursday. It was also hurt in early trading when French president Nicolas Sarkozy, who is campaigning for re-election, said strength in the single currency euro hurt exporters and should be discussed with the European Central Bank.

The euro was down 0.13 percent at $1.3110, while the dollar measured against a basket of major currencies was up 0.2 percent at 79.65.

In commodity markets the IMF's latest economic growth forecasts, which raised the global growth estimate to 3.5 percent from 3.3 percent in January, offered some support to offset the worries about the euro zone.

Brent June crude had slipped six cents to $118.72 a barrel, while U.S. May crude gained 15 cents to $104.35.

Spot gold inched up 0.2 percent to $1,652.84 per ounce after touching a one-week low near $1,634 on Tuesday.

(Additional reporting by Nia Williams; Editing by Will Waterman)

• A Permanent Economic Emergency