European shares ease, euro helped by ECB story

* European shares open down slightly after strong previousweek
* Nikkei hits highest since early May
* Dollar touches five-week high vs yen
* Euro edges higher vs dollar

LONDON - European shares eased after lastweek's strong performance on Monday while a report that theEuropean Central Bank could set an interest rate threshold forpurchases of euro zone bonds helped nudge up the euro andtemper demand for German bonds.

European and global markets have had a recent strong run onhopes that a new plan being drawn up by the ECB, the centralbank overseeing the 17 countries that use the euro, couldfinally help the bloc get on top of its debt troubles.

Top European stocks opened slightly lower on Mondayhaving closed at 13-month highs on Friday following their bestweek in seven years. The main indexes in the region were littlechanged with London down 0.04 percent and Paris and Frankfurt also lower.

German government bond futures fell 36 ticks back towardslast week's lows, while Spanish bonds rallied, an indication ofa rising appetite for risk.

The slide in Bunds was attributed report in Germany's derSpiegel magazine over the weekend that the
ECB's new bond buyingplan could include an upper limit on the price of troubledbonds, above which its purchases would kick in.

"Critical details about such a new instrument remain unclear- at least until the ECB's September meeting," said Commerzbankstrategists in a note, adding that the prospect of such a schememay boost risk sentiment in the short-term.

With many European policymakers on summer holidays, marketshave had a respite from negative headlines.
While markets anticipate some conclusive action to calm theeuro zone's troubled bond markets to be announced at the ECB'sSept. 6 policy meeting, the focus this week is on a meetingbetween leaders of Greece and Germany on Friday, the same daySpain will give details of its 'bad bank' plans.