By Blaise Robinson
LONDON (Reuters) - European shares inched up on Friday with riskier assets still in demand following a broadly neutral shift in U.S. monetary policy, and the euro dipped after a credit agency cut its rating on the European Union.
The FTSEurofirst 300 (.FTEU3) index of top European shares was up 0.2 percent after an hour of trading. (.EU)
That kept the index on for a weekly gain of about 3.4 percent, its biggest in eight months, as sentiment stayed upbeat after the U.S. Federal Reserve sugar-coated Wednesday's cut in stimulus with a signal that interest rates were likely to stay low for longer.
"It is still highly accommodative policy from the Fed," said Ioan Smith, strategist at KCG.
The euro was down about 0.2 percent against the dollar at $1.3630.
It hit a session low of $1.3625, its lowest since December 5 after Standard & Poor's trimmed its supranational long-term rating on the European Union to AA-plus from AAA, citing rising tensions in budget negotiations.
Euro government bonds held steady following the announcement. German Bund futures were 4 ticks lower, and ten-year yields flat at 1.88 percent.
In Asia, the yen stayed under pressure against a range of currencies including the euro after the Bank of Japan held monetary policy as expected, maintaining its view that the economy is recovering moderately.
"Today's moves are very small, with many people in overseas markets already winding down ahead of the holiday next week," said Ayako Sera, senior market economist at Sumitomo Mitsui Trust Bank.
Also in Asia, Chinese stocks continued to lag other equity markets, with the Shanghai Composite Index (.SSEC) ending down 2 percent to mark its worst week since May 2011 on concerns over a renewed cash crunch. Shares of Hong Kong-listed Chinese companies (.HSCE) sagged 1.4 percent.
China's benchmark money market rate climbed to a six-month high despite attempts by the central bank to calm nerves.
"The tension in the money markets in China is something we have seen multiple times this year... It is very difficult to get a grip on how ...interconnected this is," Saxo Bank strategist Peter Garnry said.
"We know the shadow banking industry is big, we know that credit has been growing tremendously over the last couple of years, and we know parts of the banking system are not that well capitalized."
Brent crude slipped to $110 a barrel but was heading for a weekly gain, buoyed by Libyan supply cuts and a rosy demand outlook in the United States, the world's largest oil consumer.
London copper futures edged up after declining for the past three sessions, helped by tighter supplies as sustained drawdowns at London Metal Exchange warehouses brought stockpiles to the lowest in more than 10 months.
Gold languished at a six-month low and was on the edge of tipping over to a 3-1/2 year trough after the Federal Reserve's move to curb its bond-buying program prompted a huge sell-off.
(Additional reporting by Lisa Twaronite, Toni Vorobyova and Ana Nicolaci da Costa; Editing by John Stonestreet)