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GLOBAL MARKETS-Upbeat German Ifo survey lifts euro, weighs on European shares

(Fixes headline)

* European shares retreat further from 7 1/2-year highs

* Dollar slips vs euro after upbeat German morale data

* Wall Street set for steady open

By Nigel Stephenson

LONDON, March 25 (Reuters) - A forecast-beating survey of German business morale helped push the euro higher against the dollar on Wednesday, pegging back European stock markets.

Futures showed Wall Street set to open steady.

Germany's Ifo index rose for the fifth successive month to its highest since July 2014, suggesting growth in Europe's largest economy rebounded again in the first quarter of 2015.

The data, based on a survey of 7,000 firms, was stronger than forecast by economists in a Reuters poll and helped push the euro back towards $1.10.

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The single currency was last at $1.0983, up 0.5 percent on the day and rising towards Tuesday's peak of $1.1029.

Euro strength hit the exporter-heavy German DAX index , however, prompting some profit-taking, analysts said.

This in turn weighed on the pan-European FTSEurofirst 300 index which fell 0.6 percent. Just last week it touched 7 1/2-year highs.

"The macro newsflow in Europe is quite positive, but after such a rally the market needs to catch its breath," IG France chief market analyst Alexandre Baradez said.

"At this point a pause is needed, while the medium-term trend remains very positive."

Asian shares had largely stalled earlier, with MSCI (NYSE: MSCI - news) 's main gauge of Asia-Pacific stocks outside Japan edging up 0.1 percent.

Tokyo's Nikkei index rose 0.2 percent to 19,746.20 points, just below a 15-year high closing level of 19,754.36 hit on Monday.

Chinese stocks broke a 10-day winning streak as banks fell. The CSI300 index of the largest listed companies in Shanghai and Shenzhen was down 0.8 percent.

The euro hit a 12-year low of $1.0945 last week but has risen since the Federal Reserve signalled a more cautious outlook for U.S. growth, prompting some analysts to push back expectations for when interest rates might rise.

The dollar index, which measures the U.S. currency against a basket, fell 0.5 percent to 96.704 but stayed above Tuesday's two-week low of 96.378. The index has fallen about 4 percent from a near 12-year high hit in mid-March. The yen was up 0.2 percent at 119.64 to the dollar.

"Markets are still feeling the effects of the Fed stance from last week and a lot of long dollar positions are being flushed out," said Ian Gunner, portfolio manager at Altana Hard Currency Fund. "Whether this develops into a meaningful trend depends on forthcoming U.S. data."

In fixed income markets, German 10-year government bond yields fell 2 basis points to 0.22 percent.

CHINA RESERVES

Brent crude oil rose 50 cents to $55.60 a barrel, having fallen earlier on mounting evidence that China's strategic oil reserves may be nearly full and with U.S. reserves also ballooning.

China has been taking advantage of cheap oil to build up its reserves, but a senior Chinese oil trading executive said on Wednesday existing capacity was reaching its limits.

Gold slipped but kept close to a 2 1/2-week high on the growing expectation the Fed will not raise rates until September. Spot gold was last at $1,195.80 an ounce. (Additional reporting by Blaise Robinson in Paris, Shinichi Saoshiro in Tokyo and Henning Gloystein in Singapore; Editing by Catherine Evans)