European shares lower ahead of Greek high noon

Traders are pictured at their desks in front of the DAX board at the Frankfurt stock exchange February 3, 2012.

LONDON (Reuters) - The euro and European shares retreated on Monday on nerves Greek would fail to come up with the political commitments needed to avoid a potential sovereign debt default, taking the shine off a U.S. jobs report that had brightened the global economic outlook.

Greece's coalition parties must tell the European Union by 1000 GMT, noon local time, whether they accept the painful terms of a new 130 billion euro bailout, with euro zone ministers postponing a planned meeting later in the day due to Athens footdragging.

"The eurozone remains a major uncertainty. It has the potential to unravel everything in the event of a disorderly default in Greece," said Jeremy Batstone-Carr, strategist at Charles Stanley.

The drama surrounding Greek debt talk has halted a rally in global share markets which followed Friday's positive U.S. jobs report, sending the pan-European FTSEurofirst 300 index of top shares down 0.2 percent at the open. The index posted its biggest weekly rise since late December last week.

"Despite the expectation-busting (U.S.) non-farm payrolls on Friday, the optimism has faded quickly as the storm clouds surrounding Greece continue to gather," Jonathan Sudaria, trader at Capital Spreads, said.

Economic data for January from the U.S. has shown evidence of resilience, with jobs growth rising far beyond expectations while U.S. services sector activity at its highest in nearly a year, and the euro zone's private sector economy grew in January for the first time since August.

The single currency shed 0.5 percent in early European trade to stand at $1.3082, having fallen as far as $1.3075 in Asian trade.

The dollar, which had seen good gains in the wake of the jobs report especially against the Japanese yen was slightly higher against a basket of major currencies at 79.21.

Brent crude held above $114 a barrel as traders weighed the prospect of a supply disruption from Iran against the risk that a sovereign debt default by Greece could tip the euro zone into a demand-sapping recession.

(Additional reporting by Toni Vorobyova and Atul Prakash; editing by Patrick Graham)