* No sign of euro selling after Paris attack
* Many players move to sidelines ahead of first round of
* Options market action shows extent of concern over result
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, April 21 The euro inched higher in early
European trade on Friday but remained almost a cent off this
week’s highs as investors battened down the hatches for results
of the first round of a tightly-fought French presidential
Traders said an upbeat flash purchasing manager survey from
France, added to polls showing centrist Emmanuel Macron still in
pole position ahead of Sunday's voting had again been enough to
settle nerves after a dip late on Thursday.
There was no obvious reaction to the shooting of a French
policeman in central Paris overnight, an attack claimed by
Islamic State, the euro climbing around 0.2 percent by 0834 GMT
Options markets suggest investors remain worried
about strong results for far right candidate Marie Le Pen and/or
hard left challenger Jean-Luc Melenchon that would point to the
risk of another major political shock for Europe in two weeks
In line with the run-in to the U.S. election and Brexit
referendum last year, most investors looked to have moved to
minimise their exposure going into the vote.
"I think everybody is locked down," said Simon Derrick, head
of the global markets research team at Bank of New York Mellon
"It is kind of reminiscent of the big events last year where
people know that it is a binary outcome so the best approach is
to remain as cautious as possible."
Other major currency pairs were also stuck in tight ranges,
the dollar easing just 0.1 percent against the yen and less than
that against sterling.
All eyes in UK markets were on the morning release of UK
retail sales numbers, likely to provide further evidence of a
weakening of the consumer demand that has propped up economic
growth since the Brexit vote last June.
The pound surged 4 cents on Tuesday after Prime Minister
Theresa May shocked the country by calling an early general
election for June 8.
But it has struggled to make further progress since, a
reflection both of the doubt around how the outcome of the
election will play into Brexit talks later this year and
perceived threats to Britain's economic outlook.
"The forecasts do look low for retail sales and that
probably reflects the concern over the recent run of numbers,"
said a trader with one international bank in London.
"You only have to look at the election decision to see that
the government thinks the economy is going to slow dramatically.
If we don't get at least 3 percent growth, the quarter in
general will look very weak and that will encourage more selling
of the pound."
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
(Writing by Patrick Graham)