FOREX-Euro falls on Greek debt worries as talks start

* Euro falls broadly on widening Greek/German yield spreads

* Greek debt issues in focus ahead of EU/IMF aid talks

* Canada dollar at 22-mth high vs US dollar on rate outlook

(Releads, updates throughout)

By Naomi Tajitsu and Neal Armstrong

LONDON, April 21 (BestGrowthStock) – The euro fell (Read more about the trembling euro. ) broadly on
Wednesday, relinquishing earlier gains, as a rise in the premium
demanded to buy Greek bonds highlighted uncertainty about how
Athens would resolve its debt problems.

The euro hit a two-week low against the dollar, stung by a
widening in the Greek/German government bond yield spread beyond
500 basis points as talks began in Greece with the European
Union and International Monetary Fund on a bailout package.

The cost of insuring against a Greek default climbed to a
record high. Greece is widely expected to request up to 30
billion in emergency aid from the euro zone and IMF.

Germany’s economy minister said IMF aid could amount to 12
billion euros, in line with estimates, but added aid should wait
until the effects of Greece’s austerity measures were seen,
underlining the uncertainty that hangs over the issue.

“The FX market is nervous about widening sovereign spreads.
The German minister’s comments on Greece look to be driving it,”
said Paul Robson, currency strategist at RBS.

By 1136 GMT, the euro (EUR=: ) had fallen more than half a
percent on the day to $1.3360 according to Reuters data, its
lowest since April 9.

Losses in the euro helped to boost the dollar as worries
about Greece increased the appeal of the U.S. currency, seen as
a safe haven. Against a currency basket (.DXY: ), it recovered
from the day’s low to trade 0.3 percent higher at 81.289.

But the dollar (JPY=: ) fell 0.3 percent to the day’s low of
92.94 yen, as the low-yielding Japanese currency benefited from
a sudden shift to risk aversion.

The yen recovered from broad losses as the Greek debt crisis
took centre stage. Earlier in the day, it came under selling
pressure as strong U.S. earnings boosted risk appetite, although
this dissipated during the European session.

The market awaited a raft of first-quarter earnings reports
from AT&T, McDonald’s, Starbucks and other U.S. corporates.
Apple Inc (Read more about Apple stock future.) (AAPL.O: ) posted first quarter earnings on Tuesday
that far exceeded expectations, while Goldman Sachs (GS.N: ) also
announced strong results.


The Canadian dollar (CAD=D4: ) rallied across the board,
pushing as high as C$0.9931 to the U.S. dollar in earlier
European trade, its strongest since May 2008. It rose to
C$1.3330 to the euro, its highest since November 2007.

The Canadian currency extended its rally from Tuesday, when
the Bank of Canada signalled an interest rate rise may come as
early as June. Stronger commodity prices also provided a boost.

“The Canadian dollar is rallying after the BoC dropped its
conditional commitment not to move on rates,” said Adam Cole,
global head of FX strategy at RBC Capital Markets.

“We have a near-term target versus the U.S. dollar of
C$0.9800 and expect that to be reached pretty quickly,” he said.

It was also on the cusp of an 18-month high against the yen
(CADJPY=R: ), having risen about 11 percent against the Japanese
currency since starting its rally in late February.

The Swedish crown (EURSEK=D4: ) hit a 19-month high against
the euro of 9.5850 per euro, extending its rally after Sweden’s
central bank on Tuesday cemented market expectations for a rise
in interest rates in July or September.

Stock Investing

(Editing by Nigel Stephenson)

FOREX-Euro falls on Greek debt worries as talks start