FOREX-Euro rises as EU backs Greek plan; dlr slips

* Euro lifted by rise in equities; EU approves Greek plan

* Euro up 0.2 pct at $1.3993 (EUR=: ); up 0.5 pct vs yen

* U.S. ADP jobs report eyed for clues for Friday’s payrolls

* Norwegian rate decision due, seen on hold

(Adds quotes, updates prices)

By Tamawa Desai

LONDON, Feb 3 (BestGrowthStock) – The euro rose against the dollar
on Wednesday as the European Commission backed a Greek
deficit-cutting plan as expected, easing some investor worries
over euro zone fiscal problems and boosting appetite for risk.

A rise in European shares also improved sentiment towards
riskier assets, helping to push the dollar broadly lower.

The EU’s endorsement of Greece’s plan to reduce its budget
deficit to below 3 percent of GDP by 2012 [ID:nLDE6121AH] helped
narrow the spread between Greek and German government bond
yields. (GR10YT=RR: )(EZ10YT=RR: ) [ID:nLDE612103]

By 1213 GMT, the euro traded up 0.2 percent at $1.3993
(EUR=: ), after rising to a session high of $1.4026, and moving
further away from a 6-month low around $1.3850 hit on Monday.

Against the yen, the euro gained 0.5 percent (EURJPY=R: ) to
126.80 yen.

Analysts said the EU’s approval would ease near-term
concerns and underpin the euro, though Greece’s problems were
far from over.

“Ultimately it will prove a slow and hard slog for the Greek
government to regain the markets’ trust requiring the government
to successfully meet its budget deficit-cutting targets,” said
Lee Hardman, currency strategist at Bank of Tokyo-Mitsubishi

Furthermore, concerns remained about other smaller
debt-laden euro zone countries such as Portugal and Spain, which
could hinder the single European currency.

EU Economic and Monetary Affairs Commissioner Joaquin
Almunia said those countries shared some of Greece’s problems.

A monthly Reuters poll showed respondents expected the euro
to stand at $1.40 in one month’s time. For more results see


The dollar index (Read more about the global trade. ) (.DXY: ) (=USD: ) fell 0.1 percent at 78.894
but not far from a six-month high of 79.534 struck earlier this
week. Traders said an Asian sovereign account was a large seller
of the greenback in European trade.

The U.S. currency tumbled as low as 90.09 yen. It was last
flat on the day at 90.43 yen (JPY=: )

Improving risk sentiment buoyed higher-yielders such as the
Australian dollar (AUD=D4: ), which rose 0.4 percent to $0.8901,
further away from five-week lows hit earlier this week.

Traders looked to the ADP private-sector employment report
for clues to Friday’s all-important U.S. jobs report for
January. (ECONUS: )

Ahead of a rate decision, Norway’s central bank said it
would tighten guidelines for types of collateral commercial
banks can use for loans with the central bank. [ID:nOSN004229]

Norges Bank will announce a rate decision at 1300 GMT, and
key interest rates are expected to remain unchanged after a rate
increase last December. Markets will look for clues for a
possible rate hike next month.

“Despite the consensus for no change from Norges Bank, we
note that the bank has been known to surprise,” said UBS
analysts in a note. “We expect that at the very least, stronger
economic data would appear to justify a stiffening of the
language in the policy statement.”

The euro was steady against the Norwegian crown at 8.1461
crowns (EURNOK=R: ). Any impact may be limited as the market has
largely priced in further rate rises, traders said.

Central bank policy decisions for the euro zone and the UK
were scheduled for Thursday, with the Bank of England expected
to halt its quantitative easing programme.

Stock Market News

(Additional reporting by Neal Armstrong, editing by Nigel
Stephenson and Stephen Nisbet)

FOREX-Euro rises as EU backs Greek plan; dlr slips