Euro rises on Greek debt deal, upside seen limited

TOKYO Tue Nov 27, 2012 5:10am IST

1 of 7. Traders work in front of a trading board showing Shutterstock Inc on the floor of the New York Stock Exchange, October 11, 2012.

Credit: Reuters/Brendan McDermid

Stocks

   

TOKYO (Reuters) - The euro hit a one-month high in early Asian trade on Tuesday after officials said global lenders reached a deal on new debt targets for Greece, key to freeing up the next installment of emergency aid.

The euro gained about 0.3 percent to $1.3008, its highest level since October 31. It last traded up 0.2 percent at $1.2993.

Hiroshi Maeba, head of FX trading Japan for UBS in Tokyo, said the euro's rise above Friday's high of $1.2991 prompted players to trigger stops around $1.3.

But he cautioned, however, that the euro still faced downside risks as the latest agreement does not offer a fundamental resolution to the euro zone's debt crisis.

"The euro gained but the rise is small, and it's unlikely that it will climb further, with big funds winding down their positions ahead of the year-end. Any rise will be countered by selling to cap the euro's upside," Maeba said.

Greece's international lenders agreed to reduce Greek debt by 40 billion euros to 124 percent of gross domestic product by 2020 through a package of steps, sources said.

It was not immediately clear how the debt would be reduced from its currently forecast level of 144 percent in 2020 to the target of 124 percent, but it is expected to involve a series of measures including an extension of the maturity and lowering of interest rates on loans to Greece, a debt buyback and a return to Athens of profits made by the European Central Bank on Greek debt it holds.

Reaction in stock markets may be muted as an agreement was expected and there has been a lack of progress in the United States towards resolving the 'fiscal cliff'.

Republicans in the U.S. Congress on Monday called on President Barack Obama to detail long-term spending cuts to help solve the country's fiscal crisis, while holding firm against the income tax rate increases for the wealthy that Democrats seek.

Japan's Nikkei stock average .N225 is expected to trade in a range after a recent fast-paced rise on the back of weakness in the yen.

On Monday, global shares and the euro weakened as investors cautiously awaited the outcome of the euro zone finance ministers meeting with Greece's global lenders and amid the lack of progress on U.S. fiscal issues.

(Additional reporting by Ayai Tomisawa in Tokyo; Editing by Edwina Gibbs)

REUTERS SHOWCASE

2015: India Outlook

2015: India Outlook

India in 2014: A dream run for markets  Full Article 

Funding Woes

Funding Woes

Co-founder of SpiceJet seeks time to finalise rescue  Full Article 

Regulating Airfares

Regulating Airfares

India considers temporary cap on airfares - government official  Full Article 

Flying Back on Course

Flying Back on Course

The inside story of the new Airbus A350 jet  Full Article 

Oil Price Forecast

Oil Price Forecast

Oil prices likely to rebound in second half of 2015: poll  Full Article 

Cyber Attacks

Cyber Attacks

China condemns cyberattacks, but says no proof N.Korea hacked Sony  Full Article 

Connecting Markets

Connecting Markets

China stock connect scheme scorecard throws up surprises  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage