FOREX-Euro resumes fall on debt concern, shrugs off Ifo

* Euro resumes losses, hits two-month low vs dollar

* Debt worries remain; Korea tensions spark risk aversion

* Euro shrugs off record German Ifo; dlr index at 2-mth high

(Updates prices; changes byline, dateline; previous TOKYO)

By Jessica Mortimer

LONDON, Nov 24 (BestGrowthStock) – The euro hit a two-month low
against the dollar on Wednesday as an earlier recovery fizzled
out due to worries the euro zone debt crisis will spread and on
renewed concerns about Korean tensions.

Spreads between peripheral government bond yields and their
German counterparts widened while a North Korean statement in
the wake of Tuesday’s artillery clash that the South’s action
was driving the peninsula to the brink of war [ID:nTOE6AN07C]
prompted investors to seek safe-haven currencies.

This pushed the dollar to a two-month high against a basket
of currencies, while the focus on troubles in the euro zone
periphery meant the euro quickly shrugged off a record high
German Ifo business climate index for November. [ID:nBEB004484]

Many uncertainties remained over whether the crisis in
Ireland would be resolved, particularly given political tensions
in the country, while worries intensified that the crisis could
spread to Portugal or even Spain.

“The risk is still to the downside and the euro is very
vulnerable due to the Irish crisis and worries about whether
Portugal will be next in line,” said Niels Christensen, currency
strategist at Nordea in Copenhagen.

Standard and Poor’s downgraded its sovereign rating on
Ireland [ID:nSYU010701], which will later unveil a budget plan
explaining how it plans to save 15 billion euros over the next
four years. [ID:nLDE6AM25A]

The euro was down 0.5 percent at $1.3305 (EUR=: ), having hit
a two-month low of $1.3284, according to Reuters data, and
broken below its 100-day moving average. It resumed losses after
a fall of nearly two percent on Tuesday.

The euro may be set for a re-test of $1.3232, a 61.8 percent
retracement of its August-November rally, before $1.3000.

The euro fell (Read more about the trembling euro. ) to a two-month low against the yen (EURJPY=R: ),
which also benefited, along with the dollar and the Swiss franc,
from investors seeking safe haven-assets.

“Portugal and Spain spreads are widening,” a London-based
trader said. “Real money are selling out stale longs built up
over summer. We are just accelerating as this crisis is going to
run for a while longer.”

RISK AVERSION

The dollar index (Read more about the global trade. ) (.DXY: ) (=USD: ) rose 0.2 percent to a high of
79.995, its strongest in two months.

The dollar gave a muted reaction to minutes from the Federal
Reserve’s last policy meeting that showed officials considered
even more drastic options to boost growth before it settled on
buying $600 billion in Treasuries. [ID:nWALNME6T7

The dollar fell 0.1 percent versus the yen to 83.03 yen
(JPY=: ), with its 55-day moving average, now at 82.74, seen as a
floor.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ TAKE A LOOK-Korea situation [ID:nKOREA] Risks to watch on Korean peninsula [ID:nRISKKR] Fed pondered radical policy steps [ID:nFEDAHEAD] TAKE A LOOK-Europe debt problems [ID:nLDE68T0MG] Multimedia on euro zone crisis http://link.reuters.com/kar27p ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

Traders said market liquidity was lighter than usual ahead
of a U.S. market holiday on Thursday.

The Australian dollar (AUD=D4: ) was up 0.4 percent from late
U.S. levels to $0.9771, recovering from Tuesday’s fall to a
four-week low of $0.9708 though well off highs of $0.9818.

“The Australian dollar is one of the few currencies people
still like to hold, given strong economic fundamentals,”
Nordea’s Christensen said.

(Additional reporting by Naomi Tajitsu in London and
Hideyuki Sano in Tokyo)

FOREX-Euro resumes fall on debt concern, shrugs off Ifo