* Chinese data suggest second quarter slowdown less sharp
* European shares track Asian gains after Chinese data
* Oil firm at 3-1/2 month high, copper sheds gains
By Marc Jones
LONDON, July 15 (Reuters) - European stocks pared gains
along with the commodities-linked Aussie dollar on Monday as
better-than-feared Chinese growth led investors to book profits
ahead of U.S. data later and this week's deluge of top company
European shares began to sag by midday as London's
FTSE, Frankfurt's DAX and Paris's CAC 40
trimmed earlier gains back to 0.1 to 0.3 percent,
putting them roughly in line with Asian bourses for the day.
China's economic growth cooled to 7.5 percent in the second
quarter from a year ago as expected, while other figures showed
a healthy rise in retail sales and a minor undershoot of
forecasts in industrial output.
Comments by Beijing last week had led markets to think the
numbers might have been weaker, so the outcome brought relief.
Commodities initially drove higher, but like stocks saw some
profit-taking following a strong week last week.
Oil slipped from a 3-1/2 month high as it hovered
just under $109 a barrel, while copper, gold and
silver were all nursing minor losses.
The Australian dollar, closely attuned to China's
fortunes due to its appetite for Aussie raw materials, lost some
of its post-data ground to stand 0.2 percent higher at $0.9095.
The U.S. dollar was up 0.3 percent on the day
against a basket of currencies ahead of U.S. retail sales at
1230 GMT. The data will provide a timely take on the country's
economy ahead of Federal Reserve Chairman Ben Bernanke's two-day
appearance in Congress from Wednesday.
Markets went into a mild panic last month when the Fed laid
out a rough timetable for phasing out its stimulus, but Wall
Street roared back to all-time highs last week after a campaign
by the world's top central banks to soothe market concerns.
"We are of the view that the U.S. recovery remains on track
so we don't think there will be any delay to the start of the
tapering process (of Fed stimulus) said Alvin Tan, an FX
strategist at Societe Generale.
"Bernanke is unlikely to come across more dovishly than he
did last week which undoubtedly surprised the market."
The U.S. dollar edged up 0.3 percent against a basket
of top currencies as the retail sales data neared, while Wall
Street was expected to open a touch higher after
its record finish on Friday.
"The Fed has maintained (that tapering stimulus) is data
dependent and so retail sales data today is key," said Paul
Robson, currency strategist at RBS.
"We still buy into the idea of relative outperformance of
the U.S. economy, and that supports the dollar. But I don't
think we will get another kicker higher on retail sales or on
Bernanke's testimony," he added.
Banking giant Citi kicks off this week's blizzard of
earnings, which includes most of Wall Street and a host of U.S.
bellwethers such as Microsoft, IBM and Coca Cola.
"U.S. equities have not really been ruffled by the rise in
bond yields," said Soc Gen's Tan.
"The S&P 500 has been one of the top performers in the world
so basically it is a story of U.S. recovery, and the rise in
Treasury yields and U.S. equities is consistent with that."
In the bond market, trading was largely subdued.
Benchmark German Bund futures were 15 ticks lower
on the day at 143.51 having gained almost two points last week
while a selloff in Portuguese bonds steadied as traders awaited
developments after its political troubles.
French bonds, meanwhile, gave a Gallic
shoulder shrug to a downgrade by Fitch after it became last of
the big three ratings firms to strip Paris of its AAA status on
"Conservative bond investors, such as reserve managers, used
to have triple-A only mandates but they have adapted to the
reality that there aren't many triple-As anymore," said Nikolaos
Panigirtzoglou, head of global asset allocation at JPMorgan.