By Alex Richardson SINGAPORE (Reuters) - European index futures rose and the euro edged off a seven-month low on Tuesday after a report that Italy may get financial support from China sparked a bout of short-covering but did nothing to ease fears that Europe is sliding into another banking crisis. Asian shares staged a modest rebound, but growing expectations of a Greek debt default, sharp drops in French bank shares on Monday due to their sovereign exposure and a surge in Italian bond yields meant sentiment remained fragile and any rally was likely to be short lived. "There are still enormous challenges facing the European system at this point and fears around a default in Greece are very high and it's hard to see that changing any time soon," said Greg Gibbs, a strategist at RBS in Sydney. The dollar eased broadly, helping lift dollar-denominated commodities such as gold, copper and crude oil. Euro STOXX 50 index futures rose 1.1 percent, and DAX and CAC-40 futures were also up more than 1 percent, while financial bookmakers called the FTSE 100 to open up as much as 1.4 percent. In Asia, Japan's Nikkei share average rose 1 percent and Australia's benchmark index gained 0.9 percent, while MSCI's broadest index of Asia Pacific shares outside Japan was flat. The MSCI index is nearly 20 percent below its 2011 high reached in April. A fall of 20 percent or more is the generally accepted definition of a bear market. U.S. stocks bounced back late in Monday's session after a report that Italy could get financial support from China tempered investors' worst fears over the euro zone debt crisis. Continued...

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