* Fed’s Bullard: not clear that dollar will firm further vs euro
* Weaker greenback helps copper and gold to firm up
* European shares dip after strong gains
By Marc Jones and Francesco Canepa
LONDON, March 23 (Reuters) – The dollar resumed its fall on Monday after its steepest weekly drop in 3-1/2 years, as comments by a top Federal Reserve official added to last week’s dovish policy message.
The dollar’s fall helped copper and gold prices to firm while European shares dipped, giving back some of last week’s strong gains, and U.S. futures pointed to a flat start on Wall Street.
St Louis Fed President James Bullard told CNBC that the dollar index, which measures the greenback against a basket of major currencies, was not far from fair value and it was unclear how much more it would strengthen against the euro.
The dollar, which hit a 12-year high this month, was down 0.5 percent at 1227 GMT, having dropped 2.6 percent last week after the Fed eased fears of an aggressive rise in its interest rates.
“People are just a bit nervous about the dollar’s strength at the moment,” said James Hughes, chief market analyst at online broker eToro.
The benchmark FTSEurofirst share index dropped 0.7 percent, pulling back from a seven-year high.
Spanish yields nudged higher after the anti-austerity party Podemos made big inroads in regional elections, with a vote split across the political spectrum offering a possible foretaste of national elections later this year.
“…with Podemos there’s some political risk as we don’t know how strong they will be in general elections and how much this might influence the established parties in their programmes,” said DZ Bank strategist Daniel Lenz.
Attention was also returning to Greece, with Prime Minister Alexis Tsipras due to meet Angela Merkel in Berlin later on Monday.
Market moves were modest, though, tempered by the prospect of purchases by central banks as the European Central Bank’s trillion euro quantitative easing scheme enters its third week.
OIL UNDER PRESSURE
Oil prices also came under pressure, with Brent hovering just above $ 55 a barrel, after top exporter Saudi Arabia said it would only consider cutting output if other producers outside OPEC did so too.
Analysts at Barclays forecast on Monday that if OPEC production held near current levels of near 30 million barrels per day (bpd), the market surplus would expand from 0.9 million bpd to 1.3 million bpd.
Gold steadied after a three-day rally that pushed it to its highest in two weeks, as a weaker dollar and caution from the Federal Reserve on the timing of a possible hike in U.S. interest rates generated modest investor interest.
Elsewhere, lead prices climbed on concern about potential shortages after a dramatic drop in available inventories, while a weaker dollar helped to support other metals, with copper rising to its highest in more than two months.
The drop in available lead stocks occurred after mass “cancellations” – when owners of metal give notification of impending shipment – of 98,350 tonnes in warehouses spread across a dozen locations worldwide.
“It’s quite amazing. I don’t know if it’s the biggest single percentage cancellation move on record, but it must be up there,” said David Wilson, an analyst at Citigroup in London.
The weaker dollar had also powered Asian currencies higher, with Malaysia’s ringgit, the second-worst performing Asian currency this year, marking its best day in seven weeks.
(Additional reporting by Lisa Twaronite in Tokyo; Editing by Susan Fenton and Kevin Liffey)