* European stocks fall after Fitch UK debt comments
* Wall Street set for gains at the start
* Euro steady to higher.
By Jeremy Gaunt, European Investment Correspondent
LONDON, June 8 (Reuters) - Renewed worries about European sovereign debt, this time Britain's, knocked equities back on Tuesday and ate into early euro gains against the dollar.
Wall Street looked set for some gains at the start, but Europe's FTSEurofirst 300 <.FTEU3> was down 0.9 percent, giving up an early rise.
That pushed MSCI's all-country world stock index <.MIWD00000PUS> into negative territory, down 0.2 percent. The emerging market sector <.MSCHIEF) was flat.
Ratings agency Fitch unsettled investors in British assets, saying "the scale of the UK's fiscal challenge is formidable and warrants a strong medium-term consolidation strategy -- including a faster pace of deficit reduction than set out in the April 2010 budget."
It was the latest salvo in a series of concerns expressed by rating agencies about the state of government finances in Europe, including Greece, Spain, Hungary, Ireland and Britain.
Solving the debt problem implies heavy budget cuts at a time when many believe spending is needed to help keep economic recovery on track.
"There's a growing, pervasive sense of unease," said Mike Lenhoff, chief strategist and head of research at Brewin Dolphin Securities in London. "Maybe the way the markets are beginning to look at this now is that the fiscal austerity is going to be a major restraining feature."
Investors are currently balancing negative sentiment engendered by the likes of the Greek debt crisis with positive sentiment from relatively good economic outlooks in countries like Germany and the United States.
"There are concerns that the global economy might lose its footing going forward, but recent data, including upbeat corporate earnings, runs counter to that," said Mitsuo Shimizu, deputy general manager at Cosmo Securities in Japan.
STEADIER EURO
The euro came off its highs but was still up 0.1 percent at
$1.1931
It was up 0.4 percent against sterling at 0.8266 pence as
the British currency was hit by Fitch's comments
"There's been a big drop in equity markets and something of a rise in general volatility," said Peter Frank, currency strategist at Societe Generale.
Analysts said the euro gained support earlier in the day after euro zone ministers made final arrangements on Monday to set up funds for countries facing debt servicing problems. [ID:nLDE65707V]
A widening in peripheral euro zone bond yield spreads over their safe-haven German counterparts also weighed on the euro. (Additiional reporting by Brian Gorman and Naomi Tajitsu; Editing by Susan Fenton)