FOREX-Euro's run of record highs halted by Juncker comments

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By Toni Vorobyova

LONDON, March 4 (Reuters) - The euro halted its five-day run of record highs versus the dollar on Tuesday after European officials voiced concerns about the sharp rise of the common currency.

Jean-Claude Juncker, chairman of the Eurogroup of finance ministers, said on Monday the ministers and European Central Bank President Jean-Claude Trichet had discussed exchange rate policy and agreed to express concerns about excessive moves.

However on Tuesday he seemed to slightly soften his stance, saying he sees no general harm to the economy from a strong euro and it is not wise to have targets for the exchange rate.

"I think that's a step in the direction of becoming more worried about the euro. Still it seems that he (Juncker) softened those comments this morning," said Johan Javeus, FX strategist at SEB in Stockholm.

"The market hasn't completely re-evaluated the situation based on these statements, but they have taken the edge off some of the euro strength we've seen recently."

By 1138 GMT the euro was steady at $1.5217 EUR=, off the $1.5275 high set on Monday according to Reuters data.

The single currency also retreated from record highs versus sterling EURGBP=.

The dollar recovered from all-time troughs against a basket of major currencies .DXY, and held at 103.00 yen JPY= -- above the previous session's three-year troughs of 102.59 yen.

ALL TALK?

The euro has gained nearly 3.5 percent against the dollar in the past week on expectations the Federal Reserve will keep cutting interest rates aggressively to fend off a recession.

However, Greek finance minister George Alogoskoufis said the Eurogroup did not discuss currency market intervention, and analysts said any such moves were very unlikely for now.

"This (Juncker's comments) may be seen by the market as the first warning sign from the Eurogroup but we don't think it is a very aggressive one that is going to be a precursor to some sort of intervention," Bear Stearns said in a research note.

"We still suspect that the U.S. Treasury is focused full-square on prising currency flexibility out of China and will not want to compromise this by intervening against currencies like the euro. And, without U.S. support we very much doubt that the Eurogroup will try to intervene alone."

Belgian finance minister Didier Reynders said U.S. concern over the dollar could be the first step to currency collaboration, while Trichet stressed that Washington favoured a strong dollar and ECB Governing Council member Guy Quaden called on the U.S. authorities to reaffirm that policy.

There were also signs the exchange rate is starting to take its toll on European companies, with German engineering giant Siemens (SIEGn.DE) saying the euro is at a level that's not easy for it.

However, unlike past periods of dollar weakness, the move has not been largely borne by the euro -- the U.S. currency has also tumbled 5 percent versus the yen over the past week.

Elsewhere, the Australian dollar fell around 1 percent AUD= after the country's central bank raised interest rates by 25 basis points to a 12-year high of 7.25 percent but acknowledged some signs that economic growth was cooling.

A rate decision is also due in Canada at 1400 GMT, where opinion has recently swung narrowly in favour expecting a 50 basis point rate cut rather than just a 25 basis point one.

Fed Chairman Ben Bernanke speaks later on Tuesday and analysts expect he will reiterate his willingness to cut rates.