* Uncertainty over Greek aid continues
* EU and IMF clash over Greece
* Weak ZEW data highlights problems facing Germany
* Fears about U.S. "fiscal cliff" favor dollar
By Julie Haviv
NEW YORK, Nov 13 The euro rose against the
dollar on Tuesday on hopes of a resolution to the Greek debt
crisis, rebounding from a two-month low.
But disappointment over a delay in Greek aid, uncertainty
about Spain's request for a bailout and fears over a U.S. fiscal
crisis should limit the currency's upside.
Market uncertainty has caused the euro to lose value against
the safe-haven dollar in six of nine trading sessions in
November, for roughly a 1.9 percent loss.
Greece's international lenders gave the country more time to
fix its budget, though they did not disburse the aid Greece had
hoped to use to refinance 5 billion euros of its debt by Friday.
A German newspaper report that Germany wants to bundle Greek
aid into a single payment of more than 44 billion euros caused
the euro to bounce off a two-month low. Traders interpreted the
report, which cited government sources, as a sign that the euro
zone's paymaster was eager to see a resolution.
"People want closure on so many things, namely clarification
on Greece and a resolution on Spain," said Marc Chandler, global
head of currency strategy at Brown Brothers Harriman in New
The euro should gain if Spain requests a bailout because it
would set the stage for the European Central Bank to buy its
debt to lower its borrowing costs.
The euro was last up 0.1 percent at $1.2714, having
earlier dropped to $1.2660, its lowest since Sept. 7.
"Also, with U.S. fiscal cliff negotiations about to get
underway the euro will be prone to bouts of consolidation,"
Chandler said. "Those negotiations should be ripe with
brinkmanship and I think we will hit the 'fiscal cliff,' but it
will not last long, perhaps until the middle of January."
Meanwhile, speculation that Spain, the euro zone's
fourth-largest economy, will formally request a bailout buoyed
the country's bonds.
"Spain bailout speculation caused Spanish bonds to rally
strongly, but I do not believe Spain will ask for a bailout
before important elections later this month and they may even
wait longer, perhaps until next year," Chandler said.
A weak German ZEW sentiment survey heightened concerns about
the impact of the euro zone crisis on Europe's largest economy
and knocked the euro earlier in the session.
A public clash between Greece's international lenders over
how Athens can bring its debts down to a sustainable level has
fueled fears that Europe's troubles could flare up anew.
A German government source said European countries
deliberating on payments to Greece could bundle several tranches
into a single payment of more than 44 billion euros.
But the euro remained vulnerable to uncertainty over funding
for the debt-stricken country. Asked about the report, a German
finance ministry spokeswoman said no final decision had been
made on Greek loans.
"There is quite a long list of worries at the moment, with
the overall backdrop risk-negative," said Vassili Serebriakov,
foreign exchange strategist at BNP Paribas in New York.
"There is no Greece resolution and it looks like some of the
critical details for receiving more aid have been pushed to the
end of this month," he said. "It is also unclear if Spain will
request a bailout and on top of that we have a looming U.S.
Eurogroup Chairman Jean-Claude Juncker said on Monday the
ministers would meet again on Nov. 20, though officials said
more talks could be needed the following week to cement a deal.
BNP Paribas' Serebriakov said the euro could fall to $1.26,
but believes it should rise by the end of the year.
"Once all of the market uncertainties are resolved the euro
could easily rise above $1.30 and we expect the euro to hit
$1.35 by the end of the year," he said.
Under the terms of its second bailout program, Greece was
due to receive 31.2 billion euros by the end of June, plus an
additional 5 billion by the end of September and 7.2 billion
euros by the end of December.
The source in Germany said these three payments could be
combined to avoid stoking uncertainty with further deliberations
on tranches in the coming weeks and months.
The lack of a fresh aid payment meant Greece had to roll over
short-term borrowing. It sold 4.062 billion euros of treasury
bills on Tuesday, not enough to finance a 5 billion issue
maturing on Friday.
The safe-haven U.S. dollar has been buoyed by worries over
the U.S. "fiscal cliff," a series of massive budget cuts and tax
hikes that will take effect if Congress cannot agree on a deal
by the end of the year.
The dollar index was flat at 81.070, having earlier
hit a two-month high of 81.241.
Against the yen, the dollar was down 0.1 percent at 79.38
, according to Reuters data.