Euro trims gains versus dollar, trades below $1.23

NEW YORK Fri Jul 27, 2012 2:33pm EDT

A picture illustration shows a 100 Dollar banknote laying on one Dollar banknotes, taken in Warsaw, January 13, 2011. REUTERS/Kacper Pempel

A picture illustration shows a 100 Dollar banknote laying on one Dollar banknotes, taken in Warsaw, January 13, 2011.

Credit: Reuters/Kacper Pempel

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NEW YORK (Reuters) - The euro pared gains versus the dollar in mid-afternoon trade on Friday as investors refocused on uncertainty about what actions the European Central Bank may take to stem the euro zone debt crisis.

The euro last traded up 0.1 percent at $1.2292.

It had earlier risen to a session high of $1.2389 after Bloomberg reported European Central Bank President Mario Draghi would favor giving the bailout fund a banking license and would meet with German's Bundesbank President Jens Weidmann.

ECB Spokeswoman, asked about the report of Draghi's meeting with Bundesbank's Weidmann, said it's usual practice for Draghi to meet with governing council members.

"Fundamentally, there's a lot of uncertainty and still a lot of unanswered questions as to how exactly the ECB plans to bring down sovereign borrowing costs," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

"To some extent, the rally in the euro and more broadly equities and risk assets had gotten a little bit ahead of itself."

(Reporting By Wanfeng Zhou)

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