* Uncertainty about Greece, Spain bailout pressures euro
* Stock losses, earnings worries lift safe-haven currencies
* Euro hits three-week high versus Swiss franc
By Wanfeng Zhou
NEW YORK, Oct 9 The dollar and yen rose against
the euro on Tuesday on investor nervousness about upcoming U.S.
third-quarter corporate earnings results and on uncertainty
about Greece and Spain.
Gains in the safe-haven U.S. and Japanese currencies
accelerated after Wall Street stocks fell further, with
technology shares hit by several brokerage downgrades of
companies including Intel.
Repeated warnings about the economy - the latest coming from
the International Monetary Fund - have left investors cautious
ahead of what could be a disappointing U.S. earnings season,
which begins with Alcoa Inc after the market close.
Weak earnings results could weigh on equity prices and the
euro and bolster the appeal of safe-haven currencies. Stocks and
the euro move together 90 percent of the time, Reuters data
showed, with the euro rising when stocks gain.
"It looks like a risk-off trade here. We saw stocks take a
dive," said Ronald Simpson, managing director of global currency
analysis at Action Economics in Tampa, Florida. As markets enter
the earnings season, "equities could be a little choppy and that
might drive the dollar direction a little bit."
The euro fell 0.8 percent to $1.2871, well below a
two-week high of $1.3071 hit on Reuters data on Friday. Traders
cited bids below $1.2900 and offers around $1.3000, suggesting a
narrow range for the euro.
Concern about Greece also resurfaced after European Central
Bank chief Mario Draghi told a European Parliament committee
that Greece has made progress on reforming its economy, but has
more work to do.
In Athens, German Chancellor Angela Merkel said the pace of
reform in Greece has accelerated and that the tough path Greece
is on will pay off. Her visit was marred by clashes between
police and protesters.
Uncertainty about whether and when Spain will request aid
also weighed. A request would activate the European Central
Bank's bond-buying program to help troubled euro zone economies
and is widely seen as the next step forward for Europe.
Adding to the negative sentiment, the IMF cut its global
growth forecasts for the second time since April and warned U.S.
and European policymakers that failure to fix their economic
ills would prolong the slump.
"The tone of the market still feels greatly uncertain as we
head into earnings season in the United States and indeed the
market is now focusing its attention that way as it seeks out
bad news wherever it can find it," said Brad Bechtel, managing
director at Faros Trading in Stamford, Connecticut.
Against the yen, the euro lost 0.9 percent to 100.65 yen
, well below Friday's two-week high of 102.80. It also
dropped 0.6 percent against sterling to 80.47 pence.
SWISS FRANC DROPS
The euro hit a three-week high against the Swiss franc as
traders cited a media report that U.S. custodial banks were set
to impose a penalty on Swiss and Danish crown deposits.
A spokesman for Bank of New York Mellon confirmed a charge
for Danish crown deposits, while a spokesman for State Street
said negative rates would apply for both Swiss francs and Danish
Both currencies have been safe havens for investors fleeing
the euro zone debt crisis. While the Swiss National Bank imposed
a floor on the euro/Swiss franc pair at 1.20 francs to curb
inflows, Denmark's central bank has cut official rates.
Gareth Berry, currency strategist at UBS Singapore, said the
franc's weakness was likely to be temporary given rates have
been negative in the interbank market for months, and that those
wanting to hold Swiss franc deposits for safe-haven reasons were
unlikely to be deterred by the penalty.
The euro rose as high as 1.21435 francs on EBS
trading platform earlier in the day and was last up 0.1 percent
at 1.2108. The dollar gained 0.8 percent to 0.9404 franc.
Against the yen, the dollar slid 0.2 percent to 78.19 yen
, moving further away from a two-week high of 78.87 set on
The dollar index, which tracks the greenback versus a basket
of currencies, rose 0.6 percent to 80.013.