Euro hits more than 2-week low on Greece concerns

A one Australian dollar coin ($1.09) is seen in this picture illustration taken in Sydney April 29, 2011. The Australian dollar consolidated near recent highs against a broadly weaker U.S. currency on Friday and within spitting distance a huge chart objective at $1.1000, having enjoyed its best month so far this year.

NEW YORK (Reuters) - The euro fell to its lowest in more than two weeks on Friday and headed for its worst week against the dollar since January after a German news report, later denied, suggested Greece had raised the possibility of leaving the euro zone.

Spiegel Online reported euro zone finance ministers were meeting in Luxembourg on Friday to discuss Greece, including the issue of its possible exit from the currency bloc. Greece, through its finance ministry, later denied it was considering leaving the euro zone.

The Greece headlines though were enough to send investors further unwinding their long positions on the euro, which hit a low of $1.43500, its weakest level since April 20 on electronic trading platform EBS.

"To me, the leak of this story tells me that the Greeks are not happy with the terms they are getting (from the European Union and International Monetary Fund) and are attempting to put pressure on the other parties," said Andy Busch, currency and public policy strategist at BMO Capital Markets in Chicago.

"In a market that already is selling Euros due to the ECB's (European Central Bank's) dovish statement, the (euro) is getting hit hard and isn't likely to find a bottom for some time ... even if there are denials."

In early afternoon New York trading, the euro traded 1.2 percent lower at $1.43714, further retreating from a 17-month peak of $1.49404 scaled on Wednesday. With weekly losses of 3.2 percent, the euro was on pace for its worst week against the dollar since January.

Some traders, though, said the euro is still likely to gain against the dollar in the medium term, as euro zone interest rates are expected to rise much more quickly than those in the United States.

The euro fell nearly 2 percent on Thursday after the ECB President Jean-Claude Trichet signaled a rate hike was unlikely next month but left the door open for a move in July.

The dollar, meanwhile, also got a boost from data showing U.S. employers added 244,000 jobs last month, well above what economists had expected. That boosted U.S. bond yields and increased the dollar's appeal against the yen. It was last up 0.2 percent at 80.31 yen.

It also offered respite for a market that was trying to digest a recent run of weaker-than-expected U.S. data that some feared pointed to a slowdown in the pace of U.S. growth.

(Additional reporting by Steven C. Johnson; Editing by Diane Craft)