FOREX-Euro hits 14-mth low vs dlr on contagion fears

* Euro struggles broadly, hits 14-mth low vs dollar

* Concerns escalate that Greek debt woes may spread

* Investors await ECB news conference at 1230 GMT

(Adds comment, updates throughout; previous TOKYO)

By Naomi Tajitsu

LONDON, May 6 (BestGrowthStock) – The euro tumbled to a 14-month low
against the dollar on Thursday, reeling from escalating concerns
that Greece’s debt crisis may spread to other euro zone states.

The euro fell (Read more about the trembling euro. ) as low as $1.2737, according to electronic
trading platform EBS, its weakest since March 2009, as investors
awaited any comments from the European Central Bank on how it is
prepared to help prevent contagion from Greece.

European policymakers have warned the euro’s survival
depends on a life-support package for Greece announced on
Sunday. This has ratcheted up risk aversion and boosted
safe-haven demand for the dollar, pushing it to a one-year high
versus a currency basket on Thursday (.DXY: ).

“The driver remains concerns about the European situation,
coupled with poor risk sentiment,” said Kasper Kirkegaard,
currency strategist at Danske in Copenhagen.

By 0754 GMT, the euro traded 0.2 percent lower on the day at
$1.2805, trimming losses from its slide in early Europe.

Traders said euro selling demand from Asian central banks in
early European trade had driven the single currency lower.

The euro has broken key support levels and the next level is
seen around $1.2550 with many in the market already eyeing its
2008 low around $1.2330.

Investors waited to see what reassurance the ECB will offer
at its 1230 GMT news conference. It is expected to keep rates
unchanged at 1 percent when it makes its policy announcement at
1145 GMT.

The focus will be on whether the central bank suggests it is
considering tools such as renewing currency swap lines or
purchasing government debt to stop the rout, which has raised
the cost of insuring Greek, Spanish and Portuguese debt against
default. [nLDE6450H7]

Kirkegaard at Danske said a lack of a strong response from
the ECB may put the euro under additional selling pressure.

“With all the speculation of the options policymakers can
take, we see a high possibility that they will be disappointed.
Perhaps we won’t see anything more than verbal support from the
ECB, and that could add some pressure to the euro,” he said.
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The euro sank across the board, plumbing a one-year low
against the yen of 118.85 yen (EURJPY=R: ) on EBS, while sliding
to its lowest against sterling (EURGBP=D4: ) since August 2009.

Risk aversion boosted the dollar, pushing it to a two-month
high against the Australian dollar (AUD=D4: ), but the U.S.
currency fell against the yen, which also rose broadly due to
its perceived safe-haven appeal.

The dollar (JPY=: ) slipped 0.3 percent to 93.50 yen, while
the Australian dollar and sterling each fell roughly 0.6 percent
versus the Japanese currency.

Sterling (GBP=D4: ) fell 0.2 percent to $1.5066, its weakest
since late March, as polls opened for UK parliamentary
elections. The pound came under selling pressure as surveys
point to the possibility of no party emerging with an overall
majority. [nUK/POLL]

Stock Investing

(Editing by Nigel Stephenson)

FOREX-Euro hits 14-mth low vs dlr on contagion fears