RPT-GLOBAL MARKETS-Euro in cautious recovery, Asian stocks weak

* Euro off four-year lows but jitters remain

* Stocks lower on Germany's move to tighten regulations

* More volatility expected as uncertainty grips markets (Repeats to more subscribers)

By Umesh Desai

HONG KONG, May 20 (Reuters) - The euro struggled to retain gains on Thursday after a fragile rebound from the previous day's four-year lows as political divisions in Europe and fears of more regulations kept investors edgy and pressured stocks.

Investors pushed Asian stocks lower in early dealings with Japan's benchmark Nikkei average <.N225> pulled down by exporters. The Nikkei struck an 11-week closing low on Wednesday after Germany's move to stamp on speculative trading.

The Japanese yen , which usually gains during heightened uncertainty and risk aversion, rose early which hurt Japanese exporter shares. That rise does not augur well for high-yielding currencies like the Australian dollar , which is down over 4 percent this week.

Germany's sudden decision to ban naked short-selling in some securities spooked world financial markets and hammered the euro to a four-year low against the dollar. [ID:nSGE64I073]

"Investors are entitled to be a little hesitant about putting a toe into the shark-filled waters," said Richard Morrow, director at E.L. & C. Baillieu Stockbroking. "Only one thing is certain. This volatility is likely to stay around at least in the short term. This is a trader's market."

* The euro was steady $1.2390 after rising as high as $1.2433 earlier in the day on trading platform EBS. It rebounded from a four-year low of $1.2143 on Wednesday on speculation European monetary officials might move to check its rapid fall. However, Eurogroup Chairman Jean-Claude Juncker said in Tokyo that he didn't see the need for immediate action. [ID:nTOE64I038]

* The MSCI index of Asia-Pacific shares outside of Japan <.MIAPJ0000PUS> fell just over 0.5 percent to a three-month low, before paring the losses. It has fallen 6.6 percent this week.

* Japan's Nikkei average <.N225> fell 1 percent and it is just shy of a three month intraday low struck on Wednesday.

* The Australian dollar climbed to $0.8472, having fallen to a fresh-month low of $0.8355 on Wednesday. It has lost more than 4 percent this week.

* Australian shares gave up initial gains as Wall Street's drop weighed and worries remained that Europe's debt problems could hurt its economic growth. The benchmark S&P/ASX 200 <.AXJO> was down 0.5 percent, wallowing at a 9-month low.

* London three-month copper led industrial metals higher on the back of the relief for the euro but the mood was distinctly edgy as investors braced for a fresh wave of uncertainty and risk aversion. The metal was up about 2 percent.

* U.S. crude futures <0#CL:> hovered around $71 a barrel on Thursday, rising for the second day in a row, in a technical rebound ahead of the front-month June contract expiry later in the day.

* U.S. Treasuries edged higher on safe-haven buying. The yield on the benchmark 10-year note eased to 3.36 after rising 2 bps the previous day on euro jitters. (Additional reporting by Sonali Paul in MELBOURNE)